United States High-Technology Office Outlook 2013

High-technology
Office Outlook
United States . 2013
Clustering continues across the

U.S. as innovative companies
large and small grow in core
and emerging markets
High-tech services employment growth beats U.S. employment growth
by 2.2 times.
No signs of a bubble here: conservative funding, stable IPO activity and

accelerator and incubator launch pads stabilize growth.
Existing high-technology clusters and
the emergence of new clusters will
drive continued economic growth
while also reshaping the commercial
office landscape.
3 Jones Lang LaSalle • United States High-technology Office Outlook • 2013
Table of contents
Table of contents 3 Pittsburgh - Emerging market 48
In this report 4 Portland - Core market 50
What you need to know – Puget Sound - Core market 52

Key findings for the high-technology office outlook 5
Raleigh-Durham - Core market 54
High-technology office markets out-perform overall U.S. 6
Salt Lake City - Emerging market 56
The high-technology economy 7
San Diego - Core market 58
Venture capital and IPO activity 10
San Francisco - Core market 60
Spotlight:
Interview with RocketSpace CEO, Duncan Logan 12 San Francisco Mid-Peninsula - Core market 62
High-technology industry market score and cycle clock 14 Silicon Valley - Core market 64
Local markets - Core and emerging 15 Washington, DC - Emerging market 66
Atlanta - Emerging market 16 Appendix 68
Austin - Core market 18 Employment characteristics 69
Baltimore - Emerging market 20 Investment and innovation 70
Boston - Core market 22
Chicago - Emerging market 24
Dallas - Core market 26
Denver - Core market 28
Indianapolis - Emerging market 30
Las Vegas - Emerging market 32
Los Angeles - Emerging market 34
Minneapolis - Emerging market 36
New Jersey - Emerging market 38
New York - Core market 40
Orange County - Emerging market 42
Philadelphia - Emerging market 44
Phoenix - Emerging market 46

In this report
Jones Lang LaSalle’s third annual High-Technology Office Outlook

is a comprehensive study of one of the most innovative and dynamic
industries in the United States, its impact on local economies, and the
growth generated within the commercial real estate sector. From Detroit
and the automobile industry in the early 1900s to the San Francisco
Bay Area in the 21st century, many predecessors of innovation and
advancement have existed over the years, emerging with each new
era. Indeed, this report highlights the emergence of today’s clusters
of innovation across the United States, offering insight into the growth
of smaller pockets as well as substantiated evidence supporting the
dominance of the industry’s core markets.
Today, location plays an important role in the success of a high-

technology company. Whether it’s a start-up capitalizing on the
proximity of venture capitalists, a company in search of the best and
brightest talent, or an established brand that continues to expand,
operating in the right market with the right office space is paramount
to the success and sustainability of this industry. In this report, we will
take you from Silicon Valley and its tech giants to Minneapolis and an
emerging cluster to demonstrate just how this industry is pushing the
needle in local economies across the United States.
What you need to know –

Key findings for the high-technology office outlook
Office market IPO activity muted in this cycle compared to dot.com boom, assuaging
Core high-tech markets across the country out-perform the U.S. in fears of tech bubble.
vacancy and rental rates, recording 14.2 percent vacancy and an
average rental rate of $32.69 at mid-year 2013. A more conservative funding environment coupled with a shift in desired
exit strategies is leading to greater growth in a more sustainable manner
High-tech has stimulated not only real estate recovery and expansion, – less boom and bust.
but a wave of new developments. The 12 core high-tech markets tracked
in this report account for nearly 50.0 percent of total U.S. construction at Ranking model
more than 23 million square feet. San Francisco’s strong job growth, high level of venture capital
investment and highly-skilled workforce placed it at the top of the list,
Economy followed by Silicon Valley, the San Francisco Peninsula, Puget Sound
Innovation clusters lead to successful economies, drive real estate and Boston.
demand. For every innovation job added, five additional jobs
are created. Feature piece
Industry insider and innovator, RocketSpace, offers insight into this
U.S. high-tech employment (manufacturing and services) grew 1.5 times highly innovative and mobile industry and where it’s headed next.
faster than total employment growth in the 12 months through May.
Local markets
Compared with the overall industrial production index, the computer and Core and emerging markets experiencing varying levels of momentum.
communications equipment production index is nearly 66 percent higher Core markets report space shortages and landlord acceptance of
at 164.1. the start-up community. Emerging markets report less robust leasing
activity from the high-tech, but continued interest from this segment,
U.S. high-tech services job growth has outperformed total nonfarm nonetheless.
employment growth by an average of four to one since January 2010.
Accelerator, incubator and co-working spaces are popping up in all
Nearly half of all utility patents in the world were generated in the U.S. markets around the country, offering start-ups flexible space in which to
last year. California is the dominant utility patent generator, followed by grow. City planning and economic development agencies are fostering
New York and Texas. this trend in some cases, providing incentives to drive the creation of
innovation clusters.
Investment
High-tech captures largest share of venture capital funding overall
as well as largest share of first sequence funding – lending to future
industry growth.
High-technology office markets out-perform overall U.S.
The high-tech industry comprises only 8.8 percent of total office-using

employment in the United States, but its impact on local commercial real Vacanc
estate markets has been tremendous. While nearly all other office-using y
industries have experienced flat or minimal growth, high-tech companies
have hired so many employees over the past three years that they now rate
face a highly competitive recruiting environment. For the commercial real
Core tech markets...
14.2%
estate market, this has resulted in local market recoveries and in many
instances, expansion. The growth has occurred so quickly that high-tech
companies in many of the country’s core markets now face a dwindling
supply of creative office space, offered at a premium.
Average rental rates in the country’s core high-tech markets at the end 16.9% ...United States overall
of the second quarter of 2013 were 11.6 percent higher than the national
average, at $32.69 per square foot compared to $29.29. Additionally,
ates Rents in core tech markets are
lr
rental rates in core markets increased by 5.1 percent compared to the soaring...
U.S. growth rate of 3.9 percent, year-over-year, and these markets also asking 11.6% more than
recorded a lower vacancy rate, at 14.2 percent compared to the U.S. the overall U.S. office market.
nta
rate of 16.9 percent.
6% Core tech markets: $32.69

Re
For high-tech occupiers, the lack of supply of creative office space has
1. United States overall: $29.29
sparked a new wave of development across the country. Developers
1
have been seizing the opportunity to appeal to these innovative

companies through both re-use and ground-up construction, resulting
in a current construction pipeline of more than 23 million square feet
across the 12 core markets, nearly half of all construction taking place in
the U.S. New York leads with 9.1 million square feet under construction,
followed by Boston, San Francisco, and Silicon Valley, which currently
have 4 million, 2.6 million, and 1.7 million square feet under construction,
respectively. Although all of this new construction won’t be occupied
entirely by high-tech, the industry’s impact on the office market is
Rent growth
Asking rents increased in core
undeniable, as companies in all sectors have become inspired to utilize
5.1%
tech markets by 5.1% in the
a more efficient and open office plan.
past 12 months vs. the U.S. office
overall increasing by just 3.9%
Construction
/2
Core tech markets
1
comprise
nearly
of all
new office
construction
under way in the U.S.
The high-technology economy
U.S. high-technology employment overview New York, Seattle and Boston. High-tech giants are increasingly looking
The dynamic high-technology sector has remained one of the strongest to other markets to set up additional offices, including Austin, Phoenix,
drivers of economic growth following the Great Recession. The industry Denver and Salt Lake City. While Silicon Valley maintains the lion’s
comprises a multitude of sub-industries, from computer manufacturing share of high-tech companies, innovation centers are springing up
to application software development, and the innovations coming from in numerous other locations, driving demand for new employees and
this sector appear to be on an unending tear, perpetuating new ideas commercial real estate in the process.
and innovations exponentially. Innovation is the key to success for this
sector, and its growth can be measured in a number of ways, including
employment growth, patent generation and venture capital funding.
Innovation jobs
=
The high-technology manufacturing and services sectors are important
Manufacturing jobs =
drivers of economic growth, especially as the industry produces a for every 1 innovation job added, 5 additional jobs are created
strong multiplier effect on the entire economy. Existing high-tech for every 1 manufacturing job added only 1.7 additional jobs are created
clusters and the emergence of new clusters will drive continued
economic growth while also reshaping the commercial office landscape. Employment by the numbers
As these innovative companies strive to maintain their leading edge, Total high-tech employment, including both the manufacturing and
they are reconfiguring their office environments to enhance interactions services sides of the industry, grew by 3.6 percent in the year through
and spark innovation. And not only do teams within an organization May 2013, one and a half times greater than total U.S. employment.
thrive in close work environments, but the collaboration of innovative
companies that work together in co-working spaces, whether in High-technology manufacturing: it’s about production
incubators or accelerators, can also result in the next big idea. We Employment on the manufacturing side has been relatively flat for the
explore these themes in the following pages, and shed light on some past year, slowing the total high-tech industry growth rate, but this is
of the ways these companies are not only contributing to economic a reflection of the greater reliance on machines rather than people to
growth, but strong demand for commercial office space. assemble goods. In fact, productivity indicators point to greater output
of high-tech products coming out of the recession, outperforming total
Innovation: The key to economic growth manufacturing productivity during the same period.
Despite the small absolute number of jobs (comprising only 3.3 percent
of private national employment), the high-tech sector is a significant The index of industrial production for computers and communications
driver of economic growth. This highly innovative industry has a direct equipment stood at 164.1 in June 2013, compared to 99.1 for general
impact on the health of the U.S. economy. Jobs within innovative industrial production as a whole. While both indices have recorded
industries, of which high-tech is a major component, have such a significant growth coming out of the recession, the computers and
significant economic impact that for each innovation job created, five communications equipment production index has increased by 67.4
additional jobs in a variety of other industries are created as a result1. percent since bottoming in February 2009, while the overall index of
In contrast, the manufacturing sector only creates roughly 1.7 new jobs industrial production has increased by 18.3 percent since bottoming in
per manufacturing job created. Hair stylists, cab drivers, baristas, yoga June 2009.
instructors, doctors, accountants and lawyers demanded by the highly
skilled and well-compensated innovative workforce have a profound U.S. high-tech manufacturing indicators
impact on local markets. 170.0
U.S. Industrial production index
160.0 U.S. Computers and equipment production index
150.0
Metro areas with a high concentration of innovative employees have
140.0
seen the greatest benefit from the concentration of these types of jobs.
Index
130.0
These centers are also where significant patent activity originates, and
120.0
where the highest number of high-tech companies are located. The
110.0
density of both the skilled labor market and the innovative employer
100.0
base creates a successful high-tech market. But the high demand for
90.0
skilled talent in these core clusters has led to the creation of emerging
80.0
innovation centers outside of the traditional markets of Silicon Valley,
Jan-07
May-07
Jan-08
May-08
Jan-09
May-09
Jan-10
May-10
Jan-11
May-11
Jan-12
May-12
Jan-13
May-13
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
1 Enrico Moretti, New Geography of Jobs

Source: Federal Reserve Board
High-technology services: innovative employees beat traditional

office jobs Measuring innovation
Looking more specifically at the services side, which directly impacts Innovation is a phenomenon that is difficult to quantify, but
demand for office space, employment growth in the high-tech industry patent activity is one way to measure the possible growth or
has been quite pronounced, outperforming U.S. nonfarm employment enhancement of a market’s innovation cluster. Utility patent
growth on a percentage basis by an average of nearly four to one generation tracks inventions by country, state and market, and this
since January of 2010. In the year through May 2013, the high-tech metric can be used as a leading indicator for potential innovation
services sector added 109,600 jobs, or 4.5 percent, besting total U.S. growth in a given area.
employment growth by two and half times.
International patent activity
While the services employment The United States remains the dominant leader in utility patent
North American Industry component of the high- generation, accounting for 121,026 utility patents in 2012, or 47.8
Classification System tech industry is small on an percent of all utility patents worldwide. Japan comes in a distant
(NAICS) categories used in absolute basis, employing 2.5 second, generating 50,677 patents, followed by Germany, generating
this report: million people in the U.S., and 13,385 patents during the same period. Rounding out the top five
representing just 8.8 percent non-U.S. patent generators are South Korea (13,233), Taiwan (10,646)
Manufacturing of total office employment, its and Canada (5,775). While China is not in the top five yet, it is gaining
1. 334 Computer Electronic impact is significant. High-tech traction at a rapid pace. In the last 10 years, utility patent generation
Product Manufacturing services sector employment has increased by 1504.5 percent, with 4,637 patents generated in
2. 3353 Electrical equipment growth has buoyed growth in the 2012. China will be an innovative force to reckon with, especially as its
manufacturing office-using sectors since 2010, university system continues to grow and its industry base expands.
accounting for 16.2 percent of
Services all office-using jobs added since Utility patents by country of origin
3. 454111 Electronic Shopping that time. Monthly job growth in
and Auctions the high-tech services sector has
4. 5112 Software Publishers also outperformed office sector
5. 518 Data Processing growth at double the rate since Canada
5,775
Hosting and Related 2010. This kind of momentum
Germany
13,835 South Korea
Services has especially been impactful on 13,233
United States
6. 519 Other information office markets with a strong tech 121,026 Taiwan Japan
50,677
services cluster. Because these jobs are
10,646
7. 5415 Computer Systems highly innovative, the multiplier

Design and Related effect is quite strong, and
Services because high-tech services jobs
are mainly office-using, the real
estate impact is difficult to ignore. Source: United States Patent and Trademark Office
U.S. patent activity by state and metro area
Utility patent generation in the U.S. has increased by nearly 40.0
U.S. High-tech services employment vs. Office-using employment percent in the last 10 years. The greatest increase was recorded in
High -tech, millions
High-tech services Office -using, millions Washington state, anchored by the strong Seattle high-tech cluster, at
2.6 28
Office-using 156.9 percent. Seattle alone generated more than three-fourths of all
2.5
27
utility patents in the state.
2.4
2.3 26 On an absolute basis, California maintains the lead with more than
2.2 32,000 utility patents generated in 2012, an increase of 70.5 percent
2.1
25
since 2002. Silicon Valley contributes most to the state total, at 36.4
percent of all utility patents, but Los Angeles, San Diego and Orange
2.0 24
County together account for an additional 30.0 percent. Texas and
1.9
23 Massachusetts round out the top three states, tallying up 8,367 and
1.8 7,640 utility patents, respectively.
1.7 22
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Bureau of Labor Statistics

Top ten states by utility patents

WA
5,390
California MN Minnesota
Broadcom, HP, 4,598 MA IBM and 3M are the
Cisco, Qualcomm NY 5,734 top 2 patent
and Apple round out MI 7,640 generators, and
the top 5 utility patent 4,598 account for 18% of
generators NJ utility patent activity
IL 4,224
4,345
CA
32,107
Texas
IBM, Texas Michigan
Instruments and The auto industry
Freescale dominates utility
Semiconductor are TX patent
the top 3 tech utility 8,367 FL generation here
patent generators 3,686
Source: United States Patent and Trademark Office
Immigration reform and the impact on the availability of skilled talent positions filled by computer systems analysts, computer programmers
The shortage of skilled workers in key high-tech clusters has and computer software engineers. Wipro, an Indian technology
underscored the lobbying efforts of some companies to increase the company with a large presence in the U.S., accounted for 14.5 percent
number of H1B visas. The H1B visa system is one way in which high- of all certified positions, followed by Infosys with 8.7 percent of all
tech companies are expanding the skilled labor pool, which is very tight certified positions. By state, it should be no surprise that California
in some of the larger high-tech clusters. This visa is a temporary work ranks first, with 117,157 certified positions in fiscal year 2011 (latest
permit that must be sponsored by the hiring company, and guarantees data available), followed by 63,985 in New York, and 56,558 certified
that hiring a foreign employee will not adversely affect the working positions in Texas. Note that these certified positions include employees
conditions of American employees. While the American university that were initially approved in past years, and continue to maintain their
system produces a hefty number of graduates in science, technology, certification to work in the U.S. on the H1B Visa program (for a total of
engineering and math (STEM) fields, those who originate from outside six years).
of the United States are not guaranteed residency once they graduate,
and must rely on landing a job with a company that is able to sponsor
their employment through an H1B visa or other work permits.
The U.S. Senate passed the immigration reform act in June 2013. If the
bill is passed by the House of Representatives and eventually goes into
law, one of the results will be an increase in the number of H1B visas
issued per fiscal year, from 85,000 to 180,000. Roll-over provisions
allow unused visas from previous years to accumulate, resulting in the
issuance of 135,530 H1B visas in fiscal year 2012.
The demand for these visas is so great that even

with the accumulated roll-overs from years prior,
when the 2013 application process for fiscal year
2014 opened the first business day in April, all of the
applications were exhausted after just a few days.
It is believed by many advocates of this reform that the increase in

H1B visas will help alleviate the talent shortage and spur additional
innovation, driving continued expansion of the high-tech industry.
The H1B visa program is highly utilized by high-tech companies,

more so than any other industry, with 46.9 percent of all certified H1B
Venture capital and IPO activity
Venture capitalists remain optimistic about high-tech seeking later stage funding must demonstrate a proven business model
With high-tech companies driving revolutionary change in our economic and consumer success.
and societal landscape, venture capitalists continue to view this
industry as a good investment. Indeed, high-tech companies continued Funding by category
to attract the highest share of venture capital dollars during the four 2% 3%
1%
quarters ending in Q2 2013, netting 60.8 percent of total funding. For 2%
5% 8%
comparison, the next two highest-funded segments of biotechnology
and medical devices and equipment captured just 18.1 and 8.5 percent
14%
of total venture capital dollars, respectively, during the same period. Of 38% 12%
the eight high-tech segments tracked, software companies captured Q3 2012 -
$8.6 billion in venture capital dollars, which was both the highest- 2000 Q2 2013
54%
funded high-tech segment, and the highest-funded segment overall. 16% 13%
Likewise, first sequence funding (first-time financing) for all high-tech 6%

18% 4%
segments amounted to an overwhelming 71.5 percent of total first 4%
sequence funding. This is an important indicator in the continuum of
the industry as start-ups feed industry growth and innovation, ultimately Computers and Peripherals Media and Entertainment
leading to future iterations of the ever-evolving industry. With high-tech Consumer Products and Services Networking and Equipment
Electronics/Instrumentation Semiconductors
start-ups capturing the vast majority of first-time financing, venture
IT Services Software
capitalists are ensuring future growth of this industry.
Source: PricewaterhouseCoopers
First sequence financing
Since the height of the dot.com boom more than a decade ago,
venture capitalists have adopted much more conservative funding
Biotechnology
Financial Services
1%
practices, understanding now that more frequently than not, start-
13%
Healthcare Services ups will fail. Understanding this fact themselves, start-ups are also
2%
Industrial/Energy
operating under more conservative guidelines, utilizing incubators and
3%
accelerators to minimize expenses, while seeking their first rounds of
Medical Devices
funding after beta tests and think-tanks help to fine-tune their product or
High-technology and Equipment Other
1%
service. While this doesn’t ensure a higher success rate, it does ensure
6%
71%
Retailing/Distribution a less exposed industry – one that will be less inflated, both from
1%
Telecommunications
private and public funding as well as from ideas of grandeur. Likewise,
2% the lower barriers to entry in this cycle make the sought after initial
investment amount for many start-ups far less risky from a venture
capitalist’s perspective.
While venture capital funding today is far less than the levels reached Activity in the public markets
at the height of the dot.com boom in 2000, the composition of funding What was once viewed as a highly attractive exit strategy for high-tech
is surprisingly similar, with the only significant differences being the companies has since taken a back seat to mergers and acquisitions
increased level of funding for software and decreased level of funding and even “acqui-hires,” as these options often offer significant payouts
for networking and equipment companies. Both of these changes without the rules and regulations instituted by the stock exchange.
represent the shift in the industry toward a more software-based Following dismal receptions on the public stock market, companies
business environment that operates in the cloud rather than through like Facebook, Pandora, Groupon and Zynga have become prime
hard-wired server rooms and equipment. examples of the drawback to being a publicly held company. With the
exception of Facebook, the remaining three companies, while wildly
Despite lower levels in funding since the anomalous height of the popular at the time of their public debuts, have since languished on
dot.com boom, the more conservative environment lends to a more the stock market as a result of poor performance, legal issues and
sustainable growth trajectory for the long term. Companies seeking declining consumer bases.
seed stage funding must now formulate a solid strategy, while those
However, while stories like these have certainly resulted in diminished more muted activity in this cycle lends credibility to the growth trajectory
IPO interest, they haven’t kept all technology companies from entering of the high-tech industry and assuages many fears that this is
the stock exchange. In 2012, 128 companies with a market cap of at another bubble.
least $50 million went public. Of the 128 public offerings, 38 were high-
tech companies, capturing $20.4 billion or 47.9 percent of total IPO Technology IPOs
proceeds. Thus far in 2013, there have been 16 public offerings within
Number of IPOs
the high-tech sector, with enterprise software proving most attractive
350
with scalable models and high revenues.
300
Ever since the dot.com boom of the late 1990s, which recorded 237 250
public offerings in 2000 alone and eventually resulted in a 78.0 percent 200
decline in the value of the NASDAQ Composite, activity in the IPO
market has remained relatively stable. Averaging just 30 technology 150
IPOs per year since 2001, the public markets have since become much 100
more conservative, exercising greater scrutiny and much more caution. 50
Additionally, high-tech companies themselves have also adopted more
conservative growth plans, opting first to grow privately through venture 0
1995 1997 1999 2001 2003 2005 2007 2009 2011
capital and other private funding rather than exercising the public
markets for new infusions of capital. Although IPOs can often be very
Source: Renaissance Capital
exciting for local markets where the company is headquartered, the
Spotlight:
Interview with RocketSpace CEO, Duncan Logan
Accelerators, incubators and co-working spaces are an emerging lectures, panels and cocktail parties to presentation days and fireside
phenomena taking hold in numerous markets across the country. These chats. The latter has been particularly successful with leading CEOs
centers for innovation and collaboration are a great way for start-ups and such as Dick Costolo of Twitter to Steve Ballmer of Microsoft providing
smaller high-tech companies to work in a shared space that allows their valuable insight into their companies.
ideas to grow. RocketSpace is on the leading edge of this new trend.
We view talent as the core ingredient to any successful company.
When we look at the success stories such as Uber, Spotify, Leap
Motion, PocketGems, Supercell or Podio, each have built great teams
in a relatively short period of time. We recently created RocketU as
our education, training and talent business, bringing in top candidates
and training them on the latest technology coding languages through a
number of course structures including a 10-week immersive developer
boot camp.
Finally, we have an active Corporate Innovation Program with many of

the Fortune 1000 which are the target audience for the program hosting
innovation teams on the RocketSpace campus, alongside our start-up
community. These include General Motors, British Airways, AB Inbev,
1. What is RocketSpace?
RocketSpace is a technology innovation campus, currently hosting
Pearson, Samsung and Microsoft. RocketSpace provides a number
of services to these companies including consulting and research
through our in-house analyst team which identifies emerging technology
over 130 leading technology companies in the heart of San Francisco. themes and companies. Our analysts cover over 20,000 start-ups
On top of a real estate platform, we provide the optimal environment worldwide and actively seek ways of driving partnerships, mergers and
for disruptive technology companies to thrive. Our business consists of acquisitions, and general business links between all of the players.
four key areas: real estate (office-as-a-service), events, education and
corporate innovation.
The office-as-a-service model provides everything a technology

company needs in an office from furniture, fixtures, refreshments and
kitchen facilities, to a 3.0 gigabit fiber connection which is the lifeblood of
any developer. All of this is provided on a per-person, per-month basis.
Meeting rooms, bike parking and receptionists are all provided on a
collaborative consumption basis. For small companies, we have open
seating in a classic co-working/open format. For companies of 10 or
more we combine private offices with open seating to create pods, which
provides more privacy, but still full access to our campus and facilities.
RocketSpace does not take equity in any of the companies but cultivates
symbiotic relationships with the leading Silicon Valley venture capital
investment firms. We see about one company per week closing a
2. What differentiates your business model from other high-tech
accelerators?
round of funding. Over our 30 months in business, current and alumni RocketSpace is focused on attracting the very best start-ups at the top
companies have raised over $2 billion in funding collectively and a end of the innovation pyramid. We believe that young companies are a
number of them have been valued in excess of $1 billion. product of their environment and, as such, should take their operating
environment seriously. Who you and your team sit next to or interact
Events hosted by RocketSpace and our member companies are a key with at the water cooler or in the kitchen is very important. Our facilities
part of the community. They take a number of different formats from are some of the largest available; we feel that critical mass is important,
as it gives us a market thickness that is a draw for supporting companies
and infrastructure.
3. Where do you see yourself within the commercial real estate

industry? You provide more than just a place to work, and providing the
right place to work is also essential in this new, high-tech era. Do you
view your business as essential to the future of high-tech growth?
We are still fine-tuning our model, and as a sector within commercial real
estate we are still in our infancy. In the early days of hosting technology
or storing data in the cloud, few people understood the demand for a
hardware-as-a-service model. We believe there are parallels with our
business and can see the demand, not just from tech companies for an
office-as-a-service model (OAAS) but also from corporates moving to in fun, culturally diverse and
more of a hub-and-spoke model utilizing OAAS for remote requirements. exciting cities.
5. Where do see the next

innovation hub emerging over
the next
few years?
We are projecting over 50
technology clusters forming
around the world over the next
five to 10 years, 10 based in
the United States. Accepting
that San Francisco, New York,
London and Tel Aviv have
already formed, we are looking
closely at Austin, Chicago, Los
We believe the financial engineering that has brought efficient financing Angeles and Las Vegas (thanks
mechanisms such as REITs to the hotel, data center, and even archiving to an extraordinary effort by Tony
sectors will eventually migrate to high-tech OAAS. RocketSpace Hsieh) in the United States, and
intends to be a major player in this area and will have both an asset- Dublin, Berlin, Toronto, Seoul
intensive and operations-focused company; this is the only way we can and Hong Kong internationally.
drive financial efficiency and improve service quality. We see it as a We would love to see Detroit
fundamental component of our business that we own an interest in the come back as an innovation
real estate, either via a partnership or directly. We do expect continued cluster. Who knows, it may have
strong growth in the high-tech sector as technology eats its way up reached its tipping point. We
every industry vertical. The pace of high-tech is getting faster and believe there will be additional
company requirements are for more immediacy and flexibility within real surprise city entrants as
estate; we enable that. governments and cities embrace
the importance of playing a role in the global clustering trend.
6. Clustering has been a significant driver of growth in this high-tech

cycle, with start-ups wanting and needing to be near other start-ups.
How does RocketSpace’s business model help facilitate this clustering?
We think clustering is essential and believe it is significantly harder
to innovate in isolation than when you are surrounded by like-minded
entrepreneurs. It is a little like practicing to play football on your own
or practicing with the 49ers.
We view RocketSpace as the
modern day stock exchange
of tech. We want to be at the
nucleus of the cluster--the central
hub with a scale of activity
that produces the fast growth
companies that can grow to a
size where traditional real estate
makes more sense.
Photo credits: Michael Dubois
4. What are your general guidelines when selecting a new market

of operation?
We have a number of criteria, from size of the local technology industry
to government political will and population density in the city. London
is a great example of political support creating a geographical focus of
activity. Probably the most important subjective factor however is the
cool element. High-tech is an industry with a highly educated and mobile
workforce. These Gen X, Gen Y and Millennials want to live and work RocketSpace CEO, Duncan Logan
High-technology industry market score and cycle clock
50.3
San Francisco
Growing
market score
late stage Contracting
Silicon Valley, Total weighted score

San Francisco Peninsula
Growing Stabilizing San Francisco 81.2
early stage
Puget Sound
Silicon Valley 78.7
Boston, Austin Pittsburgh, Phoenix, Las Vegas
San Francisco 77.0
Washington, DC Los Angeles Peninsula
Atlanta, Raleigh-Durham San Diego
Puget Sound 66.8
Denver Philadelphia, Indianapolis, Chicago,
Minneapolis, Orange County, United States
New Jersey State, New York City, Boston 61.4
Dallas, Salt Lake City Portland
Baltimore
Austin 58.8
Washington, DC 56.8
Atlanta 50.3
High-technology industry market score weighted each category to derive a total score for Raleigh-Durham 49.2
Our proprietary high-technology office market score each market:
Denver 47.4
takes into account key metrics to determine where
each market included in this report stands in the High-tech job growth: broad measure of economic New York City 45.3
high-technology office growth cycle. This score is success and job creation. New Jersey 44.6
not a ranking per se, but it does quantify market
position relative to the others based on employment Dallas 44.0
High-tech services concentration: measures jobs in
growth, high-tech office employment concentration, the industry that fall within office-using employment Salt Lake City 43.7
and innovation and investment trends. sectors as a percentage. Larger concentrations
have greater impact on office space demand when Baltimore 41.7
Because each market is scored among the others changes to employment occur, providing a strong
in this report, a high score only indicates that it is a Portland 38.2
indicator of how the high-tech industry in each
leader among the top high-tech markets in the U.S., market could move real estate. Philadelphia 36.6
while a low score means that a market has slower
momentum, but opportunity to grow even more. Indianapolis 36.1
Share of U.S. venture capital funding: measures the
impact venture capital funding has on the industry in Chicago 34.2
The high-technology industry cycle clock is a visual each market, and the potential for company growth
representation of where each market in this report and new job creation. Minneapolis 33.7
stands relative to the others in the current cycle.
Orange County 33.6
Markets positioned on the two left quadrants of the Intellectual capital: measures the availability of
clock indicate strong momentum in most—if not all— United States 33.3
skilled labor for each market, quantified by the
categories measured to produce an overall score. percentage of people 25 or older with a bachelor’s San Diego 31.1
Markets placed in the two right quadrants of the degree or higher.
clock are those that have metrics with room Los Angeles 20.3
to improve.
Innovation: measures utility patents granted in each Pittsburgh 17.9
market as a leading indicator of new inventions
We consider the following metrics to be key drivers Phoenix 17.4
or ideas.
of high-technology industry growth, and have
Las Vegas 15.7
Local markets - Core and emerging

66.8
Puget Sound
38.2
Portland
Minneapolis
61.4 Boston
33.7
45.3 New York
34.2 Pittsburgh 44.6 New Jersey
Chicago
81.2 43.7 Salt Lake City 17.9 36.6 Philadelphia
San Francisco
36.1 41.7 Baltimore
77.0 San Francisco Peninsula 47.4
Silicon Valley Denver Indianapolis 56.8 Washington, DC
78.7
15.7 Las Vegas
49.2 Raleigh-Durham
20.3 Los Angeles
Orange County
33.6 50.3
San Diego
31.1 17.4 Phoenix
Atlanta
Dallas 44.0
Austin
Core market with index score
58.8
Emerging market with index score
High-tech High-tech
High-tech services services services
s
share of office employment employment
k
employment
n
growth, 2012
r a
Silicon Valley 35.8% San Francisco 27.0% 40,322
e t
Puget Sound 31.2% San Francisco Peninsula 21.6% 33,942
ark
San Francisco Peninsula 30.8% Indianapolis 21.4% 17,706
San Francisco 18.8% Las Vegas 17.5% 7,493
m
Dallas 16.2% Austin 16.7% 28,148
Boston 15.5% New York City (Manhattan) 11.9% 76,586
Austin 14.7% Chicago 11.7% 68,091
where does your market stack up? Raleigh-Durham 14.2% Dallas 10.5% 96,197
Denver 13.2% Raleigh-Durham 10.2% 27,314
Philadelphia 12.7% Boston 9.0% 92,319
Total Total high-tech High-tech venture Share of

high-tech employment Utility patents capital funding U.S. total
employment growth, 2012 (millions) Q1 2013
Silicon Valley 202,583 2.2% Silicon Valley 10,256 San Francisco $735.0 17.8%
Boston 139,383 4.9% Boston 4,537 Silicon Valley $646.0 15.7%
Dallas 136,097 6.6% New Jersey State 3,850 New York City (Manhattan) $379.0 9.2%
Puget Sound 112,107 7.1% Puget Sound 3,597 Boston $355.5 8.6%
Los Angeles 97,811 -0.1% San Diego 3,293 Atlanta $225.6 5.5%
Chicago 97,138 7.7% Minneapolis 3,113 San Francisco Peninsula $182.0 4.4%
Minneapolis 78,601 1.9% Chicago 3,033 Washington, DC $121.9 3.0%
New York City (Manhattan) 76,916 11.7% Los Angeles 2,844 Los Angeles $111.2 2.7%
Denver 67,200 5.6% San Francisco Peninsula 2,695 Austin $85.3 2.1%
Phoenix 65,060 1.7% Austin 2,460 Salt Lake City $85.1 2.1%
Jones Lang LaSalle • United States • High-Technology Office Outlook • 2013
- Sarah Dasher
Atlanta- Emerging
Atlanta – Emerging market
market Research Manager,
Atlanta
Economic scorecard
50.3
Growing Contracting
late stage
market score Growing

early stage
Stabilizing
31,440 +7.5%
Jobs
High-tech manufacturing Annual job growth
and services jobs
Q: What types of high-tech companies are you seeing in your market?
Is there a particular specialty?
A: There is a high concentration of healthcare IT firms in Atlanta, and
$225.6 M 5.5%
Venture capital
the metro has also become established as a hub for financial high-tech
groups. Internet security, digital mobility and digital media companies
have an increasing presence.
High-tech VC funding Share of U.S.
Q1 2013 High-tech VC funding
Q: Has incubator, accelerator or co-working space helped in facilitating
start-up growth in your market?
A: Atlanta has a growing ecosystem that nurtures start-up activity.
Georgia Tech’s Advanced Technology Development Center was
founded in 1980 and since then has graduated over 130 companies that
34.5% 1,680
Innovation
have raised $1 billion dollars. In 2012, a new start-up community center

was established by the founders of Nationalbuildersupply.com adjacent Population 25+ with Utility patents
to the Georgia Tech campus in Midtown. Hypeotamus houses Bachelors degree or higher 2011
collaborative workspace and a free event facility, and has the stated
objective of being the open source development and marketing engine
for the metro’s start-up community. 2013 saw Atlanta techpreneur and
Pardot founder David Cummings purchase a traditional office building in
Buckhead and convert it to Atlanta Tech Village. The ATV offers flexible VC funding by type ($ millions)
office space and short-term lease options for nascent-stage high-tech
Computers/Peripherals
companies and has already seen a flurry of demand.
Consumer Products
Q: What does the future of high-tech look like in your market? Electronics/Instruments
A: We anticipate that demand is likely to stem from ongoing organic IT Services
growth within the local market, particularly in the emerging digital Media/Entertainment
mobility and digital media verticals. Still, there should be some new Networking/Equipment
growth to Atlanta by relocations from outside markets. Big companies
$225.6 Semiconductors
are attracted to Atlanta’s high-tech labor pool. Although not as deep as
core markets like San Francisco, the available employee base is still Software
highly knowledgeable, diverse and, perhaps most importantly,
relatively affordable.
High-tech employment High-tech employment composition

High-Tech High-Tech Services Employment Office-Using Computer/Electronic Product Manufacturing
Services 4% 2%
Office-Using Employment, Less High-Tech Electrical Equipment Manufacturing
32,500 270,000 2%
22%
E-Retailers
30,000 255,000 Online Auctions
4%
Computer Systems Design & Related Srvcs.
27,500 240,000 8%
Data Processing, Hosting & Related Srvcs.
58%
25,000 225,000 Other Information Srvcs.
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Source: BLS Source: BLS
Atlanta- Emerging
Atlanta – Emerging market
market
Q: Where do high-tech companies prefer to office in your market?
A: Technology firms are clustered primarily in two geographies. Office scorecard
Traditionally, many high-tech tenants have gravitated to the Central
Perimeter and North Fulton submarkets along the GA-400 corridor’s
$20.99 +1.6%
fiber-rich IT backbone. Big corporate occupiers also dominate in these
submarkets and can catalyze natural growth from peel-off start-ups.
Cost
Much of today’s demand, though, has been centered on the Midtown
submarket in the heart of Atlanta’s dense Urban core. Georgia Tech’s Overall average Annual rent growth
presence there acts as a natural hotbed for high-tech activity. In addition office rental rate
to typical space, there is a mix of creative, boutique product that appeals
to much of the high-tech industry. Lastly, Atlanta’s millennial workforce
is concentrated in and around Midtown, luring many high-tech prospects
19.6% 450 k.s.f.
Supply
to the submarket as they best position themselves to attract top talent.
Overall office vacancy Total office under
Q: Do recent high-tech lease transactions represent growth, or are
construction
companies mostly staying the same size?
A: Atlanta’s technology sector has very much been in growth mode with
a steady flow of announcements of jobs being added here. Mobile
software group Airwatch provides a great example. In early 2012, the
company tripled its footprint and relocated from creative loft space to 3.9 m.s.f. 2.8%
100,000 square feet in a Class A building. Just a short year later, Overall net absorption Net absorption
Airwatch announced that it would again need to expand, creating an (12 months) (% of inventory)
Demand
additional 800 new jobs at its Atlanta headquarters.
Q: How are landlords meeting the demands of high-tech companies

interested in flexible lease terms and space?
A: Landlord flexibility remains one the biggest challenges facing start-
10.9% 500 k.s.f.
High-tech services jobs Total tech tenants
ups in Atlanta. Most owners still cling firmly to a desire for long-term
as share of office jobs in the market
leases and creditworthy tenants and the metro lacks gap filler solutions
for companies that are exiting incubator programs but still very much in
a stage of infancy.
Top three recent lease transactions Select high-tech submarkets

1 Midtown
North Fulton
The Coca-Cola Company –
Technology Division North Fulton Rent: $27.00
Downtown Annual growth: +2.1%
275,000 s.f. Northwest Vacancy: 19.2%
Northwest Northeast
10 years Past 12 months
3
Northeast net absorption: 503,774 s.f.
Central Perimeter 85
75
Central Perimeter
2 Central Perimeter
AthenaHealth
675 Ponce de Leon Avenue Rent: $22.50
Midtown
Annual growth: +3.6%
60,000 s.f. expanding to Buckhead
120,000 s.f. over 5 years 285 Buckhead Vacancy: 14.3%
Midtown net absorption: 1.3 m.s.f.
West Atlanta Midtown 2
West Atlanta
3
Palo AltoVentyx Downtown North Fulton
1 Downtown
285 Northlake
Rent: $43.00 Northlake Rent: $20.50
400 Perimeter Center Terrace Annual growth: +1.5%
Vacancy: 18%
Central Perimeter 20
20,000 s.f. Vacancy: 14.3%
12-month 10 years South Atlanta Past 12 months
net absorption: 1.2 m.s.f. South Atlanta net absorption: 485,078 s.f.
- Meredith Sheeder
Austin–
Austin Core
- Core market
market Research Analyst,
Austin
Economic scorecard
58.8
Growing Contracting
late stage

early stage
Stabilizing
54,278 +9.8%
Jobs
and services jobs
A: Mobile application companies like Evernote, Mutual Mobile and
$85.3 M 2.1%
Venture capital
MapMyFitness have seen significant growth the last several quarters
with more on the way as they grow footprints alongside Apple’s second-
largest domestic location. Austin is also home to two of the largest e- High-tech VC funding Share of U.S.
commerce platforms—BigCommerce and Volusion—both growing by Q1 2013 High-tech VC funding
leaps and bounds.
40.6% 2,460
A: Prominent high-tech incubator Capital Factory recently double its
Innovation
office footprint in downtown Austin and received a visit from President

Obama in the second quarter of 2013. Austin area incubators are well Population 25+ with Utility patents
positioned, especially as letters of credit and security deposits are on Bachelors degree or higher 2011
the rise.
Q: What does the future of high-tech look like in your market?

A: Although it is already a significant component of the Austin business
landscape, high-tech in Austin will continue to grow, with events such as VC funding by type ($ millions)
SXSW Interactive further establishing the city as a national high-tech Computers/Peripherals
hub, local firms such as RetailMeNot seeing massive growth, and
$2.6 Consumer Products
established firms such as Apple expanding their existing presence in
the area. Electronics/Instruments
IT Services
Q: What types of professionals are drawn to your market? Why? Media/Entertainment
A: Professionals drawn to the Austin area tend to embrace the relaxed Networking/Equipment
atmosphere of the city, yielding a diverse mix of residents who
appreciate the great food, live music, and relatively low cost of living in
the city. Software
High-Tech High-Tech Services Employment Computer/Electronic Product Manufacturing

Office-Using
Services Office-Using Employment, Less High-Tech Electrical Equipment Manufacturing
30,000 170,000 10%
2%
28,000 4% E-Retailers
160,000
26,000 47% Online Auctions
150,000
24,000
140,000 Computer Systems Design & Related Srvcs.
22,000
20,000 130,000 33% Data Processing, Hosting & Related Srvcs.
18,000 120,000 2% Other Information Srvcs.
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2% Software Publishers
Austin–
Austin Core
- Core market
market
companies mostly staying the same size? Office scorecard
A: Recent lease activity shows unmistakable organic growth amongst
Austin area high-tech companies. Zenoss recently quadrupled its Austin
$27.89 +3.9%
footprint to 43,000 square feet at Four Points Centre, while other area
companies such as Sailpoint, Somnio and BigCommerce fight for more
Cost
space in an increasingly competitive environment.
Overall average Annual rent growth
Q: How are landlords meeting the demands of high-tech companies office rental rate
A: Due to limited marketwide vacancy, many landlords are not only
increasing rental rates sharply, but the lease term requirement now is
13.5% 1.2 m.s.f.
Supply
stretching to more than five years. Local high-tech companies are
generally seeing barriers to entry in Class A properties while rental rates
at more centrally located buildings increase to a point that is
construction
unaffordable except for well-heeled, national, credit companies.
844 k.s.f. 1.9%

Q: Is there an anchor tenant in your market that other high-tech
companies have clustered near?
A: Apple continues to anchor the high-tech hub in Northwest Austin,
adding legitimacy to a submarket that is far from a central location. Overall net absorption Net absorption
(12 months) (% of inventory)
Demand
Q: What amenities and attributes make your market appealing to high-

tech companies?
A: Relatively low cost of living and no state income taxes are economic
draws for national high-tech outfits to the area. Additionally, having an
educated workforce makes recruitment an added bonus as well as the
14.7% 1.7 m.s.f.
general quality of life and cool factor that Austin provides through its live High-tech services jobs Total tech tenants
music scene. as share of office jobs in the market

1 79
Northwest
SolarWinds Round Rock
Cedar Park Rent: $27.44
7171 Southwest Parkway Annual growth: +3.7%
45
Southwest
229,793 s.f. Vacancy: 12.5%
35
Confidential lease term Far Northwest
Past 12 months
net absorption: 268,156 s.f.
2 3 1
Northwest Northeast CBD
e-MDs North
Rent: $39.29
7800 Shoal Creek Blvd 183 Annual growth: +11.1%
360
Central 2
40,600 s.f. 290 Vacancy: 11.1%
5 years
71 Past 12 months
Central East
3
Palo AltoZenoss Southwest
Downtown
Rent: $43.00 Southwest Austin Rent: $27.66
11305 Four Points Drive 1 Annual growth: +7.2%
Vacancy:Far Northwest
18%
43,542 s.f. 290 South
35
Vacancy: 9.6%
12-month Past 12 months
5 years1.2 m.s.f.
net absorption:
Southeast
- Patrick Latimer
Baltimore
Baltimore - Emerging market
– Emerging market
Senior Research Analyst,
Baltimore
Economic scorecard
41.7
Growing Contracting
late stage

early stage
Stabilizing
33,708 +6.6%
Jobs
and services jobs
$0 M 0%
A: Cyber security related tenants dominate the area surrounding Fort
Venture capital
Meade and the NSA in Anne Arundel County. In the northern suburbs of
Baltimore along I-83, software publishers have been an important
occupier. Baltimore City Southeast has a mix of high-tech tenants drawn High-tech VC funding Share of U.S.
to the area by Johns Hopkins University and incubators that have Q1 2013 High-tech VC funding
helped to create successful social media and advertising companies.
35.8% 667
Innovation
A: Incubators in Baltimore City and Howard County have seen several

success stories and, especially in the city, have created a focal point for
high-tech tenants. The Emerging Technology Center in Canton has Population 25+ with Utility patents
been the most prominent incubator and was home to Millennial Media, Bachelors degree or higher 2011
which went public in 2012. In late 2012, a new incubator called
Betamore opened in Federal Hill. A number of co-working spaces have
opened in the past year across Baltimore City as well. In the suburbs,
the Howard County high-tech incubator saw one of its companies, VC funding by type ($ millions)
Social Growth Technologies, graduate to a 15,000-square-foot space
in Columbia. Computers/Peripherals
Q: Have you seen an increase in employee migration to your market as
a result of new, high-tech jobs?
A: High-tech companies have faced difficulty finding employees with
$0.0 Electronics/Instruments
IT Services
No high-tech VC funding in Q1 2013 Media/Entertainment
the right skill set locally, especially for the cyber security industry. The
lack of a qualified workforce has led firms to attempt to attract Networking/Equipment
employees from areas outside of the market. Semiconductors
Software

Services 2% 11%
Office-Using Employment, Less High-Tech Electrical Equipment Manufacturing
4% 3%
32,000 250,000 1%
30,000 E-Retailers
28,000
22,000 230,000
20,000 Data Processing, Hosting & Related Srvcs.
18,000
79%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Baltimore
Baltimore - Emerging market
– Emerging market
A: Several transactions have closed in Baltimore City over the past
year where companies in incubators have graduated into larger market-
$22.15 –1.4%
leased space.
Cost
companies have clustered near? Overall average Annual rent growth
A: Cyber security companies have clustered near their clients at the office rental rate
NSA and Fort Meade in Anne Arundel County. In Baltimore City, high-
tech tenants have focused on select neighborhoods in Baltimore
Southeast, including Canton, Federal Hill and Locust Point. The
15.0% 1.0 m.s.f.
Supply
Emerging Technology Center in Canton, which recently announced
they are relocating to 101 N Haven Street, has served as a focal point Overall office vacancy Total office under
for activity. construction
Q: Is creative space in high demand and, if so, how has it out-

performed the traditional office sector?
A: Creative space in Baltimore City is in short supply, with very few
existing options available to potential tenants in the market, especially
760 k.s.f. 1.1%
above 10,000 square feet. The lack of space has led tenants to turn to Overall net absorption Net absorption
Demand
adaptive re-use projects to satisfy their requirements. One recent

example is Groove Commerce, which leased 10,000 square feet at 415
S Central Avenue. The ecommerce company was located in the
Emerging Technology Center and has plans to grow by 55 to 60 people
over the next three years.
11.3% 500 k.s.f.

1
Ventura Solutions
410 National Business Pky Baltimore Southeast

Harford County
BWI / Anne Arundel Hunt Valley
Rent: $25.98
57,670 s.f.
Confidential lease term Owings Mills 1
Towson
Vacancy: 12.0%
695
Past 12 months
2 83 net absorption: 8,222 s.f.
Millennial Media
2400 Boston St 2
CBD
Baltimore Southeast Baltimore Southeast
27,328 s.f. 3 895
1 year, 6 months
Columbia BWI / Anne Arundel
1 Rent: $28.66
3
Palo Alto
Social Growth Technologies
BWI / Anne Arundel Annual growth: +1.5%
Rent: $43.00 Vacancy: 8.0%
8820 Columbia 100 Pky Past 12 months
Vacancy: Columbia 18% net absorption: 347,910 s.f.
12-month 15,251 s.f.
net absorption:
3 years1.2 m.s.f.
Annapolis
- Rebecca Herbst
Boston- Core
Boston market
– Core market
Boston
Economic scorecard
61.4
Growing Contracting
late stage

early stage
Stabilizing
139,383 +4.9%
Jobs
and services jobs
Q: What types of professionals are drawn to your market? Why?
A: Elite universities such as Harvard and MIT continue to fuel top talent
and, as a result, new ideas and products in the Boston area. These
$355.5 M 8.6%
Venture capital
academic powerhouses help drive the start-up culture in Cambridge and
the Seaport District downtown. The highly educated and skilled
Generation Y has led to a battle for talent, and thus a highly competitive High-tech VC funding Share of U.S.
market where companies seek out and pay for highly desired locations. Q1 2013 High-tech VC funding
On the other hand, Boston has deep pockets when it comes to
workforce talent, and many of its professionals are moving outside the
city limits. As a result, a number of companies are relocating to the inner
43.1% 4,537
suburbs (in areas such as Burlington and Waltham) as they believe they
do not need to be located right near the dome of MIT or Boston’s CBD in
Innovation
order to attract high-quality employees. Professionals continue to seek

live-work-play environments, but are able to find these amenities both in Population 25+ with Utility patents
and out of the city. Bachelors degree or higher 2011

A: We have seen an increase in incubator and shared workspaces to
accommodate start-ups and early stage companies. In Cambridge and VC funding by type ($ millions)
downtown Boston there are a number of shared work spaces—
examples include Workbar and the Cambridge and Boston Innovation
Centers. Rents range anywhere from $300-$900 per month per $42.1 Consumer Products
individual desk for a fully shared workspace. Demand for space from $23.3 Electronics/Instruments
start-ups continues to grow, but large players with deeper pockets $14.7 IT Services
continue to eat up space. As a result, some Cambridge officials are $10.0
Media/Entertainment
pushing for a 5 percent rule, which would require landlords to set aside
Networking/Equipment
5 percent of any newly delivered buildings for incubators and/or start- $265.5
ups. MIT and Harvard have signed onto this already, given the clear Semiconductors
marriage between space demand and their overall mission to foster new Software
business.

Services Office-Using
95,000 Office-Using Employment, Less High-Tech 580,000 Electrical Equipment Manufacturing
17%
90,000 560,000 33% E-Retailers
85,000
80,000 540,000 6% Online Auctions
75,000 520,000 4%
70,000
65,000 500,000
1% Data Processing, Hosting & Related Srvcs.
60,000 480,000 1%
Other Information Srvcs.
38%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Boston- Core
Boston – Core market
market
tech companies? Office scorecard
A: Mayor Menino developed a three-part strategy to attract tenants to
the Seaport District centered upon densely clustering companies,
$29.30 +0.1%
providing new models of housing, public infrastructure and networking
opportunities. As a result, a number of start-ups have moved to the
Cost
Seaport to capitalize on Menino’s benefits, proximity to the Financial
District and cost-effective rents compared to other CBD areas. Across Overall average Annual rent growth
the river, Cambridge remains a high-tech hub with its access to MIT and office rental rate
Harvard, venture capital firms, as well as blue-chip and start-ups alike.
Inner suburban towns such as Waltham and Burlington are ramping up
efforts to foster their live-work-play cultures in order to attract top talent
11.9% 4.0 m.s.f.
Supply
and firms. Companies looking for growth options and a more cost-
effective strategy will look to the inner suburbs.
Q: Do recent high-tech lease transactions represent growth, or are construction
A: High-tech was a major driver in Boston’s economic and commercial
real estate recovery. The high-tech industry remains in growth mode. In
fact, out of the total 12.6 million square feet required by tenants in the
1.1 m.s.f. 2.1%
market, high-tech accounts for 16.5 percent. Of that, 86 percent of Overall net absorption Net absorption
tenants are either stable or growing in terms of space needs. (12 months) (% of inventory)
Demand
Q: Is creative space in high demand, and if so, how has it out-
15.5% 2.1 m.s.f.

A: Tenants have found the brick and beam structures of the Seaport
District highly attractive. For example, LogMeIn will be the largest high-
tech company to have headquarters in the Seaport District. They are High-tech services jobs Total tech tenants
renovating over 100,000 square feet on Summer Street, updating two as share of office jobs in the market
buildings, originally built as wool and dry goods warehouses.

1 Cambridge
TripAdvisor 495 North
Rent: $42.74
Center 128, Needham Annual growth: -1.1%
128/Mass Pike
280,000 s.f. 495 Vacancy: 7.4%
15 years, 7 months
95
North Past 12 months
North West
Cambridge
2 Seaport District
Hubspot 2
Rent: $42.28
25 First Street, Cambridge 1 Annual growth: +5.1%
East Cambridge 90
61,000 s.f. Vacancy: 6.8%
7 years, 3 months 495 Mass Pike Past 12 months
Boston CBD net absorption: 100,692 s.f.
North
Station
3
Palo Alto 128Mass Pike/Northwest
Tibco Software Financial
Rent: $43.00 District Rent: $25.71
281 Summer Street , Boston Annual growth: +1.7%
Vacancy:Seaport District
18% South
40,000 s.f. Vacancy: 14.0%
Station 3
7 years, 4 months
net absorption: 1.2 m.s.f. Back Seaport
Vay District net absorption: 637,711 s.f.
- Robert Kramp
Chicago- Emerging
Chicago market
– Emerging market
Vice President, Research
Chicago
Economic scorecard
34.2
Growing Contracting
late stage

early stage
Stabilizing
97,138 +7.7%
Jobs
and services jobs
A: Chicago’s main high-tech strengths are in digital media, app
$10.8 M 0.3%
Venture capital
development, and ecommerce to a lesser degree, but all types of high-
tech companies are represented in this market.
Q: Has incubator, accelerator or co-working space helped in facilitating Q1 2013 High-tech VC funding
A: Chicago has benefitted from a growth in start-ups as a result of its
incubator and accelerator facilities. 1871, the city’s most well-known
34.2% 3,033
tech incubator, opened in May 2012 and since then has housed 225
start-up companies. The start-ups have created 800 jobs, generated
Innovation
$12.7 million in revenue and raised $27.6 million in venture capital. The
recently published Built in Chicago start-up report found that 197 digital Population 25+ with Utility patents
start-ups were launched in Chicago in 2012, up from 193 in 2011. Bachelors degree or higher 2011
Additionally, 59 companies secured funding of at least $1.0 million in
2012, an increase from 44 companies in 2011.

A: A majority of Chicago’s high-tech professionals are entrepreneurs VC funding by type ($ millions)
that are drawn to the market for its incubator and accelerator facilities Computers/Peripherals
like Catapult and 1871, and the privately funded, planned research and
development lab at the University of Illinois-Chicago. Chicago also has a $1.2 Consumer Products
$2.3
strong presence of high-tech corporate professionals that work for Electronics/Instruments
companies such as Google, Salesforce, IBM and Groupon. IT Services
Media/Entertainment
$2.3
$5.0 Networking/Equipment
Semiconductors
Software

Office-Using Employment, Less High-Tech 3% Electrical Equipment Manufacturing
70,000 960,000 24%
8%
65,000 940,000 6% E-Retailers
920,000
60,000 Online Auctions
900,000
55,000 6% Computer Systems Design & Related Srvcs.
880,000
50,000 3%
50%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Chicago- Emerging
Chicago market
– Emerging market
A: Recent high-tech leasing activity has shown signs of growth with
tenants taking more space and companies starting to move out of
$31.89 +1.4%
incubators and into their own locations. Even still, the leases for high-
tech firms tend to be smaller than the rest of the market.
Cost
Q: How are landlords meeting the demands of high-tech companies Overall average Annual rent growth
interested in flexible lease terms and space? office rental rate
A: In response to the growing high-tech industry in Chicago, landlords
have become more willing to accept shorter terms, they are including
more termination options related to tenants outgrowing their space and
15.3% 861 k.s.f.
Supply
are agreeing to smaller security deposits.
construction
Why?
A: The most popular submarket for high-tech companies is River North.
1.3 m.s.f. 5.2%

With a few large anchor tenants such as Salesforce and Google and
well-known incubators like 1871, River North has solidified its reputation
as the high-tech hub of Chicago. High-tech tenants are attracted to
River North’s abundance of Class B, historic, loft-style office space that Overall net absorption Net absorption
allow for open seating and collaboration. That area of downtown is also (12 months) (% of inventory)
Demand
the most bike friendly and has a large stock of housing and
restaurants—all of which promote the live-work balance that tech
companies value. As a result of its popularity, River North is tightening
and the Class B vacancy is 5.9 percent, the lowest in Chicago. With a
tightening market, tech companies have started to look to other markets,
7.2% 1.2 m.s.f.
like the River West where a similar building stock and amenities can be
found.

1 River North
Google
90 3 41 Rent: $31.90
1000 W Fulton Street Annual growth: -4.2%
River North North
River West Michigan
200,000 s.f. Avenue
Vacancy: 10.7%
River
West
2 River West
GoGo Wireless
Rent: $19.90
1
111 N Canal Street Annual growth: +15.1%
2
West Loop Vacancy: 18.2%
250,000 s.f. West East
15 years Loop
Past 12 months
Loop
Central
Loop
3
Palo Alto Software West Loop
Bluebeam 290
Rent: $43.00 Rent: $34.18

400 N Michigan Avenue Annual growth: -0.1%
North Michigan18%
Vacancy: Avenue
South Vacancy: 13.9%
9,500 s.f. 90
Loop
5 years1.2 m.s.f.
net absorption: net absorption: 683,000 s.f.
- Walter Bialas
Dallas- Core
Dallas market
– Core market
Vice President, Research,
Dallas
Economic scorecard
44.0
Growing Contracting
late stage

early stage
Stabilizing
136,097 +6.6%
Jobs
and services jobs
Q: When did high-tech become a truly emerging or growing industry in
your market?.
$0 M 0%
A: Some consider Dallas the cradle of high-tech in the U.S. Texas
Venture capital
Instruments (TI) was founded in 1951. Expanding from a defense
contractor, it produced the first commercial microchip (Nobel Laureate
Jack Kilby). Since then TI has been at the forefront of electronics High-tech VC funding Share of U.S.
technology, pioneering new fields. TI is in the top three for production of Q1 2013 High-tech VC funding
semiconductors, chips and digital signal processors globally. Numerous
hardware, software and solutions companies formed to serve the
expanding industry. One of the largest in this area was Electronic Data
31.4% 2,215
Systems (EDS), which pioneered data processing services for third-
Innovation
party clients. Dallas’ high-tech workforce consistently expands into new

industries as they emerge, developing clusters around computing and
wireless/mobile applications, as well as continuing involvement in Population 25+ with Utility patents
defense. The region also continues to innovate, being one of the top 15 Bachelors degree or higher 2011
patent originators in the U.S. Recently, more than a third of new patents
originated in technology (companies leading that charge include TI,
Hewlett Packard, Samsung, STMicroelectronics, Cisco, Motorola,
Raytheon and Lockheed Martin).
VC funding by type ($ millions)
Q: What types of high-tech companies are you seeing in your market? Computers/Peripherals
Is there a particular specialty? $0.0 Consumer Products
A: Because of the region’s diverse economy, companies are clustering
around all of the major industry sectors. $0.0 Electronics/Instruments
IT Services
start-up growth in your market? Networking/Equipment
A: Although still emerging, numerous incubators have been created, Semiconductors
including AT&T’s Foundry in Plano and Tech Wildcatters, to cultivate Software
the next generation of innovation. Source: PricewaterhouseCoopers

98,000 525,000 28%
9% E-Retailers
500,000
88,000 5%
78,000 450,000 Computer Systems Design & Related Srvcs.
425,000 1% 1%
68,000 2% Data Processing, Hosting & Related Srvcs.
400,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Dallas- Core
Dallas market
– Core market
A: The region has a long legacy of established high-tech companies
and innovation. That, combined with a large concentration of highly
$20.85 +0.7%
skilled employees, attracts many companies to the region. In fact, out of
the top 100 markets in the U.S., Dallas-Fort Worth ranks fifth in the
Cost
number of STEM jobs. Its high ranking is due to the region’s high
diversity, which also attracts companies to cluster around similar and Overall average Annual rent growth
supporting industries in high-tech manufacturing, information systems, office rental rate
ecommerce and professional services. Oracle, Cisco, CompuCom,
Computer Sciences Corp, Intuit, Perot Systems, McAfee, NEC Corp,
Microsoft and Amazon all have a strong presence in the market, building
20.9% 1.9 m.s.f.
Supply
on the region’s backbone of telecommunication and defense leaders.
The market also has a low cost of doing business, an aggressive Overall office vacancy Total office under
business recruitment effort, a relatively low cost of living compared to construction
many high-tech markets and high quality of life.

Why? 3.6 m.s.f. 2.2%
A: While AT&T anchors the CBD, the focus is mostly on the suburbs. Overall net absorption Net absorption
Dallas’ established “Silicon Prairie,” or Telecom Corridor through Plano (12 months) (% of inventory)
Demand
and Richardson, continues to be a preferred location. The neighboring

Far North Dallas submarket, especially around Legacy Town Center, is
16.2% 22 m.s.f.
also preferred due to the proximity of skilled labor, the proximity of
similar companies and the quality of housing options. Las Colinas has
also been a consistent location choice in the region, with Research in
Motion as an anchor tenant. High-tech services jobs Total tech tenants

1 CBD
ReachLocal
Rent: $20.57
6111 West Plano Parkway Annual growth: +0.9%
Far North Dallas
100,000 s.f. 2 Vacancy: 27.8%
3
Confidential lease term Past 12 months
35 Richardson net absorption: 177,000 s.f.
Far North / Piano
Dallas
2 1 Far North Dallas
Ignite Technologies
Rent: $21.75
6111 West Plano Parkway 75
Far North Dallas Las Colinas
20,000 s.f.
North Vacancy: 16.8%
LBJ Freeway Central
Confidential lease term Expressway Past 12 months
3
Palo Alto Richardson / Plano
NTT Data Inc. 635
Preston
Rent: $43.00 Center Rent: $19.29
5601 Granite Parkway Annual growth: +0.7%
Vacancy:Far North Dallas
18%
25,000 s.f. Oak Lawn 67 Vacancy: 21.3%
12-month / Uptown
Confidential lease term Stemmons Past 12 months
net absorption: 1.2 m.s.f. Freeway net absorption: 685,000 s.f.
30
- Amanda Seyfried
Denver- Core
Denver market
– Core market
Research Analyst,
Denver
Economic scorecard
47.4
Growing Contracting
late stage

early stage
Stabilizing
67,200 +5.6%
Jobs
and services jobs
$25.9 M 0.6%
A: Denver is a core high-tech market with a good mix of companies
Venture capital
throughout the metro area. There are a number of companies that
specialize in software publishing, computer manufacturing and data
processing and hosting. High-tech VC funding Share of U.S.
A: Denver takes part in the global trend of start-up entrepreneurs
bringing their companies under one roof to share resources, build
38.4% 745
Innovation
community and put the bulk of their attention toward the growth of their
companies. The Galvanize project, located near the CBD, is designed to
provide up to 70 start-ups at once with the workspace, investors, Population 25+ with Utility patents
mentorship and other tools necessary for success. It has been highly Bachelors degree or higher 2011
effective with a good location and the proper amenities. In the southern
suburbs, the Innovation Pavilion intended to provide many of the same
tools for start-ups; however, it has struggled due to its location and
fewer shared amenities. It is clear that more of this type of space in the VC funding by type ($ millions)
right location is needed for Denver to be a prosperous market with high-
tech businesses driving employment growth. Computers/Peripherals
Consumer Products
Q: What does the future of high-tech look like in your market? $7.2 Electronics/Instruments
A: Denver is not yet at the level of Silicon Valley or New York, but local
IT Services
leaders are working to attract the industry to the market. Denver Startup
Media/Entertainment
Week was launched in 2012 and provides new high-tech companies
with a forum to showcase their innovations. More avenues for high-tech $18.7 Networking/Equipment
companies to exhibit their innovations will attract additional venture Semiconductors
capital funding and perpetuate industry growth in the region. Software

High-Tech High-Tech Services Employment
Office-Using Computer/Electronic Product Manufacturing
Services Office-Using Employment, Less High-Tech
64,000 360,000 15% 21% Electrical Equipment Manufacturing
60,000 355,000 E-Retailers
350,000 3%
56,000
52,000 10% 3%
48,000 335,000
44,000 330,000 Data Processing, Hosting & Related Srvcs.
48%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Denver- Core
Denver market
– Core market
A: Recent lease transactions in the Denver market show that high-tech
companies are mostly staying the same size, with a handful of
$22.67 +5.2%
companies expanding. Vmware, in the Northwest submarket, expanded
its presence by over 10,000 square feet in its current building to nearly
Cost
60,000 square feet. Conversely, many companies are making lateral
moves, such as McAfee in the Southeast Suburban submarket, or Overall average Annual rent growth
renewing at their current location. office rental rate

tech companies?
14.7% 700 k.s.f.
Supply
A: Denver is appealing to high-tech companies because of its highly
educated workforce, proximity to universities with high-level research Overall office vacancy Total office under
capabilities and a growing incubator market. That being said, Denver construction
often struggles to compete with more established markets, like San
Francisco, to attract new high-tech companies. By establishing a high-
tech community and providing the funds required, Denver has the
capability to rise in high-tech popularity in the future. 473 k.s.f. 0.4%
Overall net absorption Net absorption
Demand
Why?
A: High-tech companies prefer to office in the Northwest and Boulder
13.2% 400 k.s.f.

submarkets, though it is not uncommon to find tech tenants in other
submarkets throughout Denver. The Northwest and Boulder submarkets
have a high concentration of high-tech companies, making it easy for
landlords to attract new tech tenants to the area. The buildings in these High-tech services jobs Total tech tenants
submarkets can more easily adapt and accommodate the different as share of office jobs in the market
needs and requirements of high-tech companies.

1 Boulder
Vmware Longmont 25
Rent: $23.48
380 Interlocken Crescent Annual growth: +5.3%
Northwest Boulder
59,925 s.f. Vacancy: 10.3%
5 years, 3 months Past 12 months
Lafayette
36 7
470 Brighton
2 Broomfield Northwest
TruEffect
1 Northwest Rent: $23.98
76
10170 Church Ranch Way Annual growth: +5.8%
Northwest 2 Northeast
Westminster
16,377 s.f. Commerce
Vacancy: 14.5%
5 years, 6 months Arvada City Past 12 months
270 net absorption: 37,892 s.f.
70
West CBD Midtown
3
Palo AltoMcAfee 70 6 Denver Southeast Suburban
Southeast
Lakewood
Rent: $43.00 85 Aurora 225 Rent: $20.71
10700 E Geddes Avenue Annual growth: +2.7%
Southeast Suburban
Vacancy: 18% 285
Southeast Suburban
31,897 s.f. Southwest Suburban Vacancy: 13.9%
Centennial
3 years, 3 months
net absorption: 1.2 m.s.f. 3
- Diana Nyirenda
Indianapolis
Indianapolis - Emerging market
– Emerging market
Indianapolis
Economic scorecard
36.1
Growing Contracting
late stage

early stage
Stabilizing
21,366 +16.8%
Jobs
and services jobs
$0.2 M 0.004%
A: Indianapolis is in the early stage of growing as a high-tech market
Venture capital
and includes those in software, consulting and data warehousing.
Recently, local software companies have merged or consolidated.
ExactTarget, which will maintain existing leases in place, was acquired High-tech VC funding Share of U.S.
by Salesforce.com. Also, Blackbaud/e-Tapestry, a software provider for Q1 2013 High-tech VC funding
nonprofits, relocated from the East side of Indianapolis to the North side
in order to be closer to its employee base.

31.1% 497
Innovation

A: Business incubators are available in the market to assist start-ups
Population 25+ with Utility patents
with their real estate needs. Purdue Research Park and Flagship
Bachelors degree or higher 2011
Enterprise Park are examples of incubators available. VentureCamp
was newly formed this year as a boot camp for aspiring tech
entrepreneurs. Other resources are available to high-tech companies,
such as Verge, a high-tech start-up community with over 1,500
members. VC funding by type ($ millions)
Q: Have you seen an increase in employee migration to your market as Computers/Peripherals

a result of new high-tech jobs? Consumer Products
$0.5
A: Several high-tech related jobs announcements were made during Electronics/Instruments
the first half of 2013. An increase in new high-tech jobs will be seen in IT Services
$0.02
the market in the coming quarters. Local universities, such as Indiana
Media/Entertainment
University and Purdue University, have constructed new technology
buildings and they are investing in attracting students interested in the Networking/Equipment
$1.7
STEM fields. Semiconductors
Software

Services
Office-Using Employment, Less High-Tech
19,000 190,000 1% 7% 17% Electrical Equipment Manufacturing
185,000 6%
17,000 E-Retailers
15,000 180,000
13,000 16%
11,000 165,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Indianapolis
Indianapolis - Emerging market
– Emerging market
your market? Office scorecard
A: In the last five years, high-tech has become an emerging industry. It
has followed the growth progression of life sciences and
$17.15 +3.1%
pharmaceuticals in Indianapolis. Indiana has a tax-friendly climate,
which has helped to attract new businesses to the area. As tax
Cost
incentives have been plentiful for this growing sector, so too has the
volume of high-tech firms establishing locations in the market. Overall average Annual rent growth
office rental rate
A: Recent transactions represent growth; however, most companies
16.1% 0 m.s.f.
Supply
have renewed and expanded in place whereas some have relocated,
such as Blackbaud which moved from the East side to the North side of Overall office vacancy Total office under
Indianapolis. Proximity to employee bases is important, as are area construction
amenities and parking, which makes suburban submarkets more
attractive than the CBD.

548 k.s.f. 1.3%
A: Across the board, landlords have decreased concessions due to (12 months) (% of inventory)
Demand
scarcity of large tracts of space and no new construction. However,

sizeable tenant improvement packages are available to long-term
9.1% 200 k.s.f.

tenants. The Indianapolis market is neutral, meaning landlords and
tenants have similar leverage.


1 CBD
Blackbaud, Inc.
65
2 Rent: $18.45
501 Pennsylvania Parkway Annual growth: +0%
69
North Meridian/Carmel 1
34,555 s.f. 465 Vacancy: 5.0%
10 years, 10 months Northeast
Past 12 months
Northwest net absorption: 360,000 s.f.
Keystone
2 67 Keystone
Cisco
Rent: $18.79
11711 North Meridian Street 74 Midtown
Annual growth: +0%
North Meridian/Carmel
11,888 s.f. Vacancy: 11.7%
5 years East/Southeast Past 12 months
Downtown
West/Southwest Indianapolis
3
Palo Alto Software Northwest
Compendium
Rent: $43.00 Greenwood 74 Rent: $16.53
55 Monument Circle Annual growth: +0%
465
Vacancy: CBD 18%
4,679 s.f. 70 Vacancy: 7.5%
5 years1.2 m.s.f.
net absorption: 67
net absorption: -208,000 s.f.
- Bryce Mordoff
Las
LasVegas
Vegas- Emerging market
– Emerging market
Las Vegas
Economic scorecard
15.7
Growing Contracting
late stage

early stage
Stabilizing
8,145 +17.7%
Jobs
and services jobs
$0 M 0%
A: As is the case with much of the local economic landscape, the Las
Venture capital
Vegas high-tech sector is largely tied to the Strip’s gaming industry.
Firms that specialize in technology that is used in machines and online-
based platforms are a staple of the Las Vegas technology sector. In High-tech VC funding Share of U.S.
addition, the constant need for state-of-the-art security and heavy data Q1 2013 High-tech VC funding
storage has presented the opportunity for firms to cater to this need. The
presence of new firms like Zappos has also grown in recent years,
which could potentially have an impact on the future of the industry in
22.1% 231
Las Vegas.
Innovation

A: The future of the high-tech industry will likely remain heavily tied to
gaming and tourism. However, prominent individuals from the high-tech
community are making a push to make Las Vegas the next hotspot for
innovation and entrepreneurial collaboration. Organizations like
#VegasTech and VegasTechFund are making a strong push to attract
individuals and companies to come together and build a community that VC funding by type ($ millions)
might resemble what is seen in Santa Monica, California (also known in
the technology industry as Silicon Beach). Computers/Peripherals
$0.02
start-up growth in your market? $0.0 Electronics/Instruments
IT Services
A: Incubator space has been a new trend that has emerged in Las No high-tech VC funding in Q1 2013 Media/Entertainment
Vegas to cater to the start-up and small business communities who
suffered as a result of the recession. Zappos CEO Tony Hsieh has been
the figurehead of this movement with his push to turn Downtown Las Semiconductors
Vegas into the next petri dish of innovation. If successful, the market Software
that lives and dies with tourism could see some diversification.

5% 8% Electrical Equipment Manufacturing
8,000 180,000 6%
7,000 170,000 E-Retailers
10%
160,000
5,000
4,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Las
LasVegas
Vegas- Emerging market
– Emerging market
companies have clustered near? Office scorecard
A: The growing presence of Zappos has become a beacon for the high-
tech industry in Las Vegas, especially for online-based start-ups. The
$19.61 –1.6%
success of the online retailer and its commitment to growing the local
high-tech industry has made it an anchor for the Las Vegas market. The
Cost
company’s continued growth and heavy involvement with community
projects, like the revitalization of Downtown Las Vegas, are positioning Overall average Annual rent growth
the firm to be a prominent figure for the foreseeable future. office rental rate

A: As is the case in many other markets, high-tech companies want
18.4% 555 k.s.f.
Supply
modern, trendy space in Las Vegas. High-tech firms prefer to work in an
environment that is open and collaborative with aesthetics that are Overall office vacancy Total office under
commonly associated with creative space. Repurposed buildings, easily construction
accessible amenities and environmental-friendly features are all items
that are desirable by the high-tech industry—which is why a large part of
the Downtown Project’s mission is to cater to these demands. As such,
Downtown Las Vegas is increasingly becoming a place where the new
high-tech companies prefer to live and work.
747 k.s.f. 1.2%
Demand
Q: What amenities and attributes make your market appealing for high-
tech companies?
4.8% 125 k.s.f.

A: Las Vegas offers a tech-savvy, entrepreneurial-minded labor pool
that appeals to both established firms and start-ups. Also, the market
was one of the hardest hit by the recession and has strived to offer a
more business-friendly environment than markets of neighboring states, High-tech services jobs Total tech tenants
like Silicon Valley. The cost of living and doing business has certainly as share of office jobs in the market
played a role in helping to attract firms to Las Vegas.
Top recent lease transactions Select high-tech submarkets

1
North Las Vegas
Downtown Las Vegas

Centennial Hills
Rent: $24.24
Vacancy: 9.0%
Desert Shores Past 12 months
Vegas Heights
Take-Two Interactive Twin Lakes
302 E Carson Ave Queensridge 1

25,000 s.f.
Las Vegas
5 years
The Willows Southwest Las Vegas
Rent: $20.77
Spanish Trail
Vacancy: 22.3%
Henderson Past 12 months
- Devon Parry
Los
LosAngeles
Angeles- Emerging marketmarket
– Emerging
Los Angeles
Economic scorecard
20.3
Growing Contracting
late stage

early stage
Stabilizing
97,811 –0.1%
Jobs
and services jobs
A: The local high-tech sector in Los Angeles is tied heavily to the
$111.2 M 2.7%
Venture capital
entertainment and media industry. The two industries continue to
converge, as the appetite for content through new distribution mediums
continues to increase.
A: The presence of venture capitalists, accelerators and co-working
facilities as well as an educated labor pool and rich amenity base have
all played a part in the growth of the high-tech market. Heightened
demand has translated into an increase in competition among tenants
29.3% 2,844
Innovation
for creative space, which has led landlords to increase rental rates.
Q: Have you seen an increase in employee migration to your market as Population 25+ with Utility patents
a result of new high-tech jobs? Bachelors degree or higher 2011
A: While Los Angeles has not seen a large influx of high-tech talent,
retention of the local population has been able to serve the growing
need. The local universities of UCLA, USC and Cal-Tech have been
able to produce a robust talent pool of developers, programmers and
engineers. Also, existing entertainment and advertising industry VC funding by type ($ millions)
employees are wearing new hats as they switch from film and television Computers/Peripherals
content to web. $2.0
Consumer Products
Q: What does the future of high-tech look like in your market? $8.4
Electronics/Instruments
A: As evidenced by the growing number of tenants looking to enter the
market, as well as the sustained growth from existing high-tech tenants, $49.0 $28.0 IT Services
the future looks strong. As local firms dive deeper into content creation Media/Entertainment
and distribution, the interplay between entertainment and high-tech will Networking/Equipment
become increasingly intertwined. This synergy will likely form new niche $23.8 Semiconductors
markets in Los Angeles and help to sustain market health within the Software
high-tech industry. Source: PricewaterhouseCoopers

Office-Using
Services
Office-Using Employment, Less High-Tech 6%
56,000 1,050,000 9% Electrical Equipment Manufacturing
54,000 E-Retailers
1,000,000
52,000 5% 43%
50,000
850,000 29%
44,000
1% 2%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Los
LosAngeles
Angeles- Emerging market
– Emerging market
A: Recent transactions represent both expansion of current tenants and
migration of new tenants into the market. Silicon Valley giants looking to
$32.27 +2.5%
capitalize on the synergy between media, entertainment and high-tech
are expanding their presence in Southern California. The market is also
Cost
attracting smaller operations due to the strong start-up and venture
capital infrastructure which lends itself to the financial, social and Overall average Annual rent growth
lifestyle needs of tech firms. office rental rate
Why?
A: The beach communities of Santa Monica, Venice and Playa Vista
17.7% 425 k.s.f.
Supply
have become increasingly popular with technology companies. These
areas offer a strong amenity base and an attractive live-work-play Overall office vacancy Total office under
lifestyle which is in line with the wants and needs of many high-tech construction
tenants given the younger demographic. Landlords are offering
amenities in their projects more in line with creative tenants, like outdoor
-6,700 s.f. –0.09%

space, dogs on the premises, bike storage and food trucks for
immediate on-site amenities.
performed the traditional office sector? Overall net absorption Net absorption
A: Although demand for collaborative space has been segmented into (12 months) (% of inventory)
Demand
particular areas, most notably Santa Monica, Venice and Playa Vista,
the space, which caters to high-tech tenants and entertainment and
marketing firms alike, is increasing in popularity and outperforming
traditional office space in those markets. The move toward a more 5.6% 775 k.s.f.
collaborative, open-concept layout is enticing to tenants' aesthetic High-tech services jobs Total tech tenants
sensibilities as well as their bottom line, as cost savings can be realized as share of office jobs in the market
by the efficiency gained with the increased numbers of workers
accommodated.
1
Cornerstone On Demand
1601 Cloverfield Blvd.

Bel Air Santa Monica
Santa Monica West Rent: $51.20
28,159 s.f. Hollywood
5 years, 10 months
Miracle Vacancy: 11.5%
Westwood Mile
Past 12 months
Brentwood Century net absorption: 22,912 s.f.
2 City
Sony
Olympic
13031 Jefferson Blvd. Santa
Corridor
West
Marina del Rey Monica Los Angeles
10
88,000 s.f. 1
7 years
Culver Marina del Rey/
405
City Culver City
3
Palo Alto Marina Rent: $32.31
Microsoft Del Rey Annual growth: 0%
Rent: $43.00
13031 Jefferson Blvd. Vacancy: 28.4%
Vacancy:Marina del18%Rey
Pacific Ocean 2 3 Past 12 months
21,116 s.f. net absorption: 222,515 s.f.
12-month
7 years1.2 m.s.f.
net absorption:
- Abel Balwierz
Minneapolis
Minneapolis - Emerging market
– Emerging market
Minneapolis
Economic scorecard
33.7
Growing Contracting
late stage

early stage
Stabilizing
78,601 +1.9%
Jobs
and services jobs
$1.0 M 0.02%
A: Similar to its overall economy, the high-tech sector in Minneapolis-
Venture capital
St. Paul is made up of a highly diverse mix of companies ranging from
computer and electronic component manufacturers such as Imation and
Compellent Technologies, to established software companies such as High-tech VC funding Share of U.S.
Infor and SPS Commerce, and smaller fast-growing companies such as Q1 2013 High-tech VC funding
mobile apps solutions provider Agosto and digital marketing software
developer Outsell.
38.5% 3,113
Innovation

A: Since 2010, the concept of co-working has gained significant
momentum in the Twin Cities. CoCo is a local co-working provider with Population 25+ with Utility patents
locations in both the St. Paul CBD and Minneapolis CBD. Its success Bachelors degree or higher 2011
over the last few years has led to its recent announcement to expand
into the Uptown neighborhood this fall, and Google recently formed a
two-year partnership with CoCo as a way to tap into local IT talent.
Project Skyway is another key facilitator of high-tech start-ups. The VC funding by type ($ millions)
high-tech accelerator is an effective resource locally for entrepreneurs
looking for mentorship, funding opportunities and connections to top Computers/Peripherals
talent. Consumer Products
IT Services
a result of new high-tech jobs?
Media/Entertainment
A: Migration into Minneapolis-St. Paul has been steady particularly
from locations in the five-state area. In its 2011 IT Market View Report, Networking/Equipment
KLG Advisors named Minneapolis-St. Paul as one of its most favorable $1.0 Semiconductors
metro areas for IT talent based on a set of variables including current IT Software
talent, cost of IT talent, concentration of IT talent versus the overall labor Source: PricewaterhouseCoopers
force, growth of the IT talent pool and the university pipeline.
High-Tech
High-Tech Services Employment Office-Using Computer/Electronic Product Manufacturing
Services
Office-Using Employment, Less High-Tech 2% 6% Electrical Equipment Manufacturing
45,000 425,000
40,000 420,000 8%
35,000 E-Retailers
415,000
25,000 405,000
15,000 400,000
10,000 395,000 33% Data Processing, Hosting & Related Srvcs.
5,000 390,000
- 385,000 1% Other Information Srvcs.
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Minneapolis
Minneapolis - Emerging market
– Emerging market
A: A number of recent high-tech transactions represent growth locally,
including Help/Systems’ new deal for 60,000 square feet of space in the
$24.45 +2.3%
Southwest submarket, an expansion of 50 percent. Software firm
Calabrio recently signed a 30,000-square-foot lease in the North Loop
Cost
neighborhood on the outskirts of the Minneapolis CBD and is increasing
its square footage by roughly 30 percent. Oracle recently renewed and Overall average Annual rent growth
expanded at its current location in the Minneapolis CBD, signing a office rental rate
seven-year deal for 137,000 square feet.

17.4% 0 s.f.
Supply
Why?
A: While still spread out in both suburban and urban settings Overall office vacancy Total office under
throughout the metro area, high-tech companies are increasingly construction
gravitating to the North Loop neighborhood which borders the
Minneapolis CBD. Many buildings in this district offer creative loft-style
392 k.s.f. 0.5%

space and are in close proximity to a fast growing creative class of
young professionals. The North Loop population surged 183 percent
between 2000 and 2010 as it is fast becoming a residential
neighborhood of choice for young professionals looking for quality of Overall net absorption Net absorption
life amenities. (12 months) (% of inventory)
Demand

tech companies?
A: With one of the most highly educated populations in the nation, a
8.7% 500 k.s.f.
high quality of life, an innovative spirit, a highly regarded educational High-tech services jobs Total tech tenants
system, a high concentration of Fortune 500 companies, a growing as share of office jobs in the market
population and a labor participation rate above 70 percent, the Twin
Cities has retained and attracted a number of high profile IT companies.
1 Minneapolis CBD
Kroll Ontrack 94
Northwest Rent: $26.82
8995 Columbine Road Annual growth: +2.8%
Southwest Northeast
195,000 s.f. 694
Vacancy: 16.1%
2 Southwest
Oracle Minneapolis CBD
2 Rent: $25.46
900 2nd Avenue South Annual growth: +1.6%
Minneapolis CBD 94
137,000 s.f. St. Paul CBD Vacancy: 17.5%

7 years 35W Past 12 months
3 3
Palo Alto
Help / Systems
West
494
1
Rent: $43.00 Rent: $26.41
6455 City West Parkway Southwest Annual growth: +3.5%
Vacancy: Southwest 18%
60,850 s.f. Southeast
Vacancy: 11.8%
Confidential lease
net absorption: term
1.2 m.s.f. net absorption: 221,059 s.f.
- Steve Jenco
New
NewJersey - Emerging
Jersey– market
Emerging market
Vice President, Research
New Jersey
Economic scorecard
44.6
Growing Contracting
late stage

early stage
Stabilizing
31,440 +7.5%
Jobs
and services jobs
your market?
$0 M 0%
A: New Jersey’s high-tech industry can trace its innovative roots back
Venture capital
to the days of Albert Einstein and his Theory of Relativity, which was
developed here. Bell Telephone, the nation’s first phone company, also
had its roots in the state. In 1947, scientists at Bell Laboratories in High-tech VC funding Share of U.S.
Murray Hill, New Jersey, invented the first transistor, which is often Q1 2013 High-tech VC funding
considered the most important electronics achievement in the 20th
century. The transistor became the building block for all modern
electronics and the foundation for computer technologies. During the
35.3% 3,850
second half of the 20th century, the high-tech industry rapidly expanded
Innovation
as the state’s telecommunications sector fostered a variety of start-up

venture and spinoff companies. Today, emerging companies such as
Audible, LG, Quidsi and Samsung, to name a few, have headquarters or Population 25+ with Utility patents
regional headquarter operations within the state. Bachelors degree or higher 2011

A: The high-tech industry will remain an important driver of growth for
the New Jersey economy. In 2012, high-tech services employment had VC funding by type ($ millions)
a growth rate of more than 7 percent in New Jersey according to data
from the Bureau of Labor Statistics. The high-tech industry now Computers/Peripherals
comprises more than 10 percent of the state’s office jobs. With high-tech $0.0 Consumer Products
emerging as one of Manhattan’s fastest growing industries, New Jersey
is anticipated to benefit from this sector’s growing footprint.
Furthermore, the technical demands of many high-tech firms require a
$0.0 Electronics/Instruments
IT Services
highly skilled workforce, which is continually replenished by a pipeline of
graduates from the state’s colleges and universities. Collaborative Networking/Equipment
partnerships between educational institutions and the high-tech Semiconductors
industry will help pour the foundation for continued expansion in the Software
coming years. Source: PricewaterhouseCoopers

High-Tech High-Tech Services Employment Office-Using
Computer/Electronic Product Manufacturing
Services Office-Using Employment, Less High-Tech 4%
33,000 260,000 2% Electrical Equipment Manufacturing
32,000 22%
255,000 2%
31,000 E-Retailers
30,000 250,000
28,000 240,000 4%
27,000 235,000 8%
25,000 230,000 58%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
New
NewJersey - Emerging
Jersey– market
Emerging market
A: As companies including AT&T, Avaya and Lucent Technologies
downsized their workforces and consolidated their excess space,
$24.57 +2.6%
growing high-tech companies have been able to tap this pool of highly
skilled employees, while also locating suitable space for their
Cost
operations. Relocations and rightsizings have also been driving activity
within the high-tech market, as companies reevaluate their spacing Overall average Annual rent growth
needs and pursue options that increase their operational efficiencies. office rental rate

tech companies?
24.2% 900 k.s.f.
Supply
A: Located in close proximity to New York City and Philadelphia, New
Jersey offers high-tech companies easy access to local and global Overall office vacancy Total office under
financial markets, a highly trained workforce and a state-of-the-art construction
communications infrastructure. The state’s colleges and universities
continue to attract students from near and far who are acquiring the
technical skills sought by today’s evolving high-tech companies.
1.3 m.s.f. 0.8%
Why? (12 months) (% of inventory)
Demand
A: Mixed-use town centers offering rental housing and retail options

sought by today’s young professionals, as well as mass transit-focused
submarkets, are on the radar screen for a variety of high-tech
companies. The combination of highway access and regional commuter
rail service has fueled demand for space in the Metropark submarket.
10.9% 10.4 m.s.f.
With its mass transportation link to Manhattan and competitive rental High-tech services jobs Total tech tenants
rates, the Hudson Waterfront will continue to attract the technology as share of office jobs in the market
support operations of Manhattan-based financial services firms.

1 Hudson Waterfront
Panasonic 80 95 Rent: $36.48
2 Riverfront Plz- Newark
Newark submarket Annual growth: +7.3%
255,000 s.f. Hudson Vacancy: 14.1%
15 years 1 Waterfront Past 12 months
206
net absorption: –1.0 m.s.f.
2 78
2 Metropark
EMC Corporation 3 Metropark New York
184 Liberty Corner Rd- Warren 287 Rent: $27.64
Route 78 submarket Annual growth: +2.1%
81,680 s.f. Vacancy: 21.3%
New Jersey
202
95
3 Cognizant
Palo Alto Technology Pennsylvania
9
Princeton
Solutions
Rent: $43.00 Blvd-
200 Somerset Corporate Rent: $25.10
Vacancy: Bridgewater
18% 195
Route 78 submarket 276 Vacancy: 19.2%
12-month 64,750 s.f. Past 12 months
net absorption: 1.2 m.s.f. Princeton
12 years
- Stephen Siena
New
NewYork
York- Core market
– Core market
New York
Economic scorecard
45.3
Growing Contracting
late stage

early stage
Stabilizing
76,916 +11.7%
Jobs
and services jobs
$379.0 M 9.2%
A: New York’s high-tech scene consists of a diverse group of
Venture capital
companies. The largest clusters, however, are involved in digital media,
eCommerce and FinTech.
A: Incubator, accelerator and co-working space has been vital to the
creation of New York’s start-up community. In total, there are over 100
incubators, accelerators and co-working spaces in New York City and
36.2% 1,102
Innovation
several more are currently in the market for space.
Q: When did high-tech become a truly emerging or growing industry in Population 25+ with Utility patents
your market? Bachelors degree or higher 2011
A: New York City’s high-tech community exploded during the
Bloomberg administration as city government supported the creation of
incubator, accelerator and co-working space as well as the Made in NY
brand. High-tech companies continued to expand during the recession VC funding by type ($ millions)
as highly skilled young talent left their traditional employment sectors—
finance, law, accounting and consulting—and shifted into the high- Computers/Peripherals
tech sector. Consumer Products
$72.0
IT Services
A: Historically driven by Wall Street, New York City’s talent pool is $41.9
Media/Entertainment
among the strongest globally. In the aftermath of the recession,
$242.4 $22.7
however, many of the younger high caliber professionals are looking to Networking/Equipment
the high-tech sector, instead of Wall Street. This is providing the start-up Semiconductors
community with access to deep pools of talent not only in programming, Software
but also finance, management and law. Source: PricewaterhouseCoopers

75,000 6%
70,000 950,000 24% E-Retailers
60,000 925,000
50,000 6%
875,000 62%
40,000 Other Information Srvcs.
35,000 850,000
Software Publishers
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012

New
NewYork
York- Core market
– Core market
A: High-tech lease activity has been driven by tenants outgrowing
existing space as approximately 25.0 percent of 2013 high-tech leasing
$60.66 +7.0%
has been to accommodate growth. For example, AppNexus more than
doubled into 220,000 square feet while Facebook doubled in size to
Cost
98,000 square feet. Outside of established firms, much of the high-tech
leasing has come from tenants leaving incubator space and expanding. Overall average Annual rent growth
office rental rate
tech companies?
12.1% 9.1 m.s.f.
Supply
A: Members of the creative class have long been attracted to New
York. This group, which includes high-tech employees, is attracted to
the world-class cultural amenities of New York City, as well as its dense, Overall office vacancy Total office under
urban landscape, a strong public transportation system, green space construction
and a growing number of bike lanes. Furthermore, its reputation for
diversity, tolerance and risk taking support start-up culture. Meanwhile,
a supportive local government and New York City’s role as the leading
global financial center provides strong access to capital. –4.9 m.s.f. –1.1%
Q: Where do high-tech companies prefer to office in your market? Why?
Demand
A: While a number of established high-tech companies, like

Bloomberg, Yahoo! and Microsoft, have opted to locate in Midtown,
7.8% 1.5 m.s.f.

many of the start-ups in New York City are located in Midtown South.
These firms historically clustered in Midtown South due to lower rental
rates, however, this is no longer the driver as Midtown South rents
approach parity with Midtown. Today, the decision to locate in Midtown High-tech services jobs Total tech tenants
South is driven by access to talent, availability of creative space, as share of office jobs in the market
proximity to incubators and the existing cluster of high-tech firms.

1 Chelsea
AppNexus 495
Times Square Rent: $56.34
28-40 West 23rd Street
Union City
2
Chelsea Long Island CityVacancy:
220,000 s.f.
495 Plaza District 7.8%
25A
10 years, 8 months 3 Penn Plaza/
Past 12 months
Garment net absorption: 82,666 s.f.
495 25
2 9A Grand Central
Gramercy Park
Yahoo! Chelsea
1
Rent: $52.94
229 West 43rd
Street Hoboken
Times Square Gramercy Park
Sunnyside
176,000 s.f. Vacancy: 7.2%
78 Greenwich Village Past 12 months
10 years
Hudson Square net absorption: –125,630 s.f.
Greenpoint
3
Palo AltoSAP
278
Penn Plaza/Garment
SoHo
Rent: $43.00 Rent: $48.95
501 West 30th Street Annual growth: +7.3%
Penn Plaza/Garment
Vacancy: 18%
145,714 s.f. Vacancy: 12.4%
16 years, 1 month
net absorption: 1.2 m.s.f. net absorption: 603,340 s.f.
- Bryce Mordoff
Orange
OrangeCounty
County- Emerging market
– Emerging market
Orange County
Economic scorecard
33.6
Growing Contracting
late stage

early stage
Stabilizing
63,079 +2.1%
Jobs
and services jobs
$82.2 M 2.0%
A: Orange County is home to several firms related to memory and
Venture capital
data storage, but recently companies related to software development
have become active in the office leasing realm. Small start-up
companies specializing in software related to the healthcare industry or High-tech VC funding Share of U.S.
video game production have been particularly active in the market over Q1 2013 High-tech VC funding
the past year.

A: The future of the high-tech market is likely to remain one with a
36.7% 2,310
Innovation
heavy presence of computer hardware manufacturers (e.g.,

semiconductor, memory chip and hard drive producers); however, some
of the newer tech companies like Google, Amazon and Blizzard Population 25+ with Utility patents
Entertainment have recently grown their presence in Orange County to Bachelors degree or higher 2011
tap into the skilled labor force and entrepreneurial talent. If this trend
continues, Orange County could potentially become another hot spot for
the high-tech firms.
A: Orange County has historically been a market that thrives with Computers/Peripherals
entrepreneurial-minded thinkers and companies. The professionals that $2.9
Consumer Products
$6.5
are drawn to Orange County typically cite the superior quality of life that Electronics/Instruments
is offered by its beautiful beaches, temperate weather and active
IT Services
culture. The younger generation of professionals has grown fond of the
Media/Entertainment
laidback lifestyle South County provides, which is a big reason why
many of the market’s start-up high-tech companies have established a Networking/Equipment
location there—and why it’s one of the hottest areas of the office market. $72.8 Semiconductors
Software

30,000 420,000 2%3% E-Retailers
28,000 400,000
26,000
360,000 27% 55% Computer Systems Design & Related Srvcs.
22,000 320,000
2% Other Information Srvcs.
20,000 300,000
3%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Orange
OrangeCounty
County- Emerging marketmarket
– Emerging
A: With a highly skilled labor force, Orange County is being seen by
more high-tech companies as a place to recruit top talent. The most
$22.73 +0.08%
recent example of this trend is Google’s expansion in Irvine into a new
build-to-suit facility. The building is anticipated to be a tool to help recruit
Cost
talent out of the University of California Irvine and other local universities
Overall, the active lifestyle, quality of life and proximity to Los Angeles Overall average Annual rent growth
and San Diego are appealing factors to high-tech companies in office rental rate
Orange County.

14.6% 1.2 m.s.f.
Supply
Why?
A: Start-up high-tech companies are attracted to submarkets in South Overall office vacancy Total office under
County due to the younger demographics and the residential construction
communities. Irvine and Newport Beach are also attractive to tenants
because of the visibility that is offered by Orange County’s largest
business district. While location plays a large factor, high-tech users are
more driven by the type of product available. 1.9 m.s.f. 2.1%
Q: Is creative space in high demand, and if so, how has it out-
Demand

A: Creative space is in high demand, which for the market is typically a
6.9% 265 k.s.f.

campus-style project that offers retail amenities in walking distance and
aesthetics like exposed ceilings and open plans. The Irvine Company
owns the majority of these campus projects and has been successful in
quickly leasing suites that they have speculatively built-out as creative High-tech services jobs Total tech tenants
office space, for which tenants are willing to pay a premium. as share of office jobs in the market

1 Irvine
Google Tustin
Santa
Rent: $24.51
19510 Jamboree Rd Ana Annual growth: +0.08%
80,000 s.f. Vacancy: 14.7%
405
net absorption: 1.0 m.s.f.
Fountain
Valley
Huntington
2 Backbone Beach Newport Beach
3
Entertainment 405
1 2 Lake Rent: $25.24
Forest
9 Pasteur Annual growth: +1.1%
Irvine Irvine Vacancy: 16.7%
22,000 s.f. Newport Past 12 months
1 year Beach 5 net absorption: 96,000 s.f.
Laguna
3
Palo AltoElectronics Aliso
Hills Irvine Spectrum
B&B Viejo
Rent: $43.00 Rent: $24.60
25531 Commercentre Dr Annual growth: +3.2%
Pacific Ocean
Lake Forest/Foothill
Vacancy: 18%Ranch Laguna
10,200 s.f. Beach Vacancy: 10.6%
3 years, 2 months
net absorption: 1.2 m.s.f. net absorption: 120,000 s.f.
- Sean Coghlan
Philadelphia
Philadelphia - Emerging market
– Emerging market
Philadelphia
Economic scorecard
36.6
Growing Contracting
late stage

early stage
Stabilizing
34,823 +1.3%
Jobs
and services jobs
A: Aside from large occupiers such as SunGard, SAP, and corporate
$12.5 M 0.3%
Venture capital
high-tech divisions, Philadelphia’s high-tech market is principally
comprised of small companies, occupying less than 10,000 square feet,
and incubator-based firms. The region’s growing high-tech companies High-tech VC funding Share of U.S.
cross various specializations from software and application Q1 2013 High-tech VC funding
development to cloud computing. However, there is a notable presence
of firms complementary to the education and healthcare sectors.

32.9% 2,069
Innovation
A: Philadelphia has seen a growing presence of incubator and co-

working space across the CBD. Following relocations from DreamIt Population 25+ with Utility patents
Ventures and First Round Capital last year, venture capital firm Artists & Bachelors degree or higher 2011
Instigators’ relocation to the CBD spurred the expansion of Benjamin’s
Desk, a co-working space at 1701 Walnut Street. While there have been
growth stories in the region, the sector has had a modest impact on
absorption at core office product given transactions in 2013-to-date
averaged 4,400 square feet. Most recently, image analytics firm VC funding by type ($ millions)
Curalate relocated from Benjamin’s Desk to 4,100 square feet at 2401
Walnut Street.
Consumer Products
Q: What does the future of high-tech look like in your market? Electronics/Instruments
A: Philadelphia is actively working to retain its educated talent and thus $4.6
IT Services
start-up base while attracting new growth firms to the market.
$7.3 Media/Entertainment
Urbanization to the CBD—ranging from established corporations to
early stage companies and funding sources—is facilitating the Networking/Equipment
$0.6
development of a synergistic high-tech ecosystem. The city’s $6 million Semiconductors
Startup PHL Seed Fund and state’s $100 million “Innovate in PA” tax Software
credit program seek to facilitate this positive momentum. Source: PricewaterhouseCoopers

30,000 210,000 5%
Electrical Equipment Manufacturing
9% 2% 19%
28,000 200,000 E-Retailers
190,000 1%
22,000 180,000
64%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Philadelphia
Philadelphia - Emerging market
– Emerging market
A: Amidst few transactions in the Suburbs, the CBD is seeing organic
growth and inbound demand. Following headlining deals in 2012, 2013
$24.15 +1.3%
has brought a flurry of smaller gateway office requirements from high
growth firms: iPipeline subleased space at 1818 Market Street, and
Cost
Mindgrub Technologies opened its first Philadelphia office. Online
advisory firm Brand.com additionally relocated operations downtown. Overall average Annual rent growth
While these requirements provide sources of modest positive net office rental rate
absorption, the sector has not driven robust growth for office product.
15.2% 1.0 m.s.f.

Supply
tech companies?
A: Relative to Northeast counterparts, Philadelphia is an accessible
alternative with a higher quality of life and lower cost of living. With a Overall office vacancy Total office under
student population in excess of 116,000, the city’s growing amenity construction
base and downtown culture has enhanced its ability to attract and retain
young professionals. As a result, Center City now houses a highly
educated, downtown population in the Center City Core of which 74.0
percent of residents 25 and older hold at least a bachelor’s degree. 834 k.s.f. 0.6%
Q: Where do high-tech companies prefer to office in your market? Overall net absorption Net absorption
Demand
A: The Philadelphia region has not developed a centralized high-tech

submarket. While suburban tenants are seeking submarkets proximate
to public transportation, leasing decisions in the CBD are being driven
by personal preferences with most opting for creative spaces, spurring
pockets in Market Street West and Old City, a neighborhood within 12.7% 300 k.s.f.
Market Street East. However, given the lack of creative office space, High-tech services jobs Total tech tenants
select tenants are looking to the traditional office inventory to create as share of office jobs in the market
open, collaborative environments while others opt to adaptively reuse
historic assets in Old City.
1
Brand.com
Market Street West
601 Walnut Street
Market Street East Rent: $26.60
7,320 s.f. Annual growth: +0.7%
Vacancy: 13.2%
76 Past 12 months
2 net absorption: –401,534 s.f.
676
Artisan Mobile
234 Market Street
Market Street East
6,000 s.f. 3
2
University
City
Market Street
West
Market Street East
1
3 Rent: $23.05
Palo Alto
PHD Virtual
Market Street
East Annual growth: –2.0%
95
Rent: Technologies
$43.00 Vacancy: 12.7%
76
Vacancy: 18% Blvd
1880 John F Kennedy Past 12 months
Market Street West
12-month 5,197 s.f.
- Matt Kolano
Phoenix- Emerging
Phoenix market
– Emerging market
Research Analyst,
Phoenix
Economic scorecard
17.4
Growing Contracting
late stage

early stage
Stabilizing
65,060 +1.7%
Jobs
and services jobs
A: Phoenix is an emerging technology market with a healthy mix of
both large and small technology-oriented companies focused primarily
$0.5 M 0.01%
Venture capital
in the Southeast Valley. Well-established manufacturing firms like Intel,
Honeywell and ON Semiconductor rely heavily on the Phoenix
workforce and employ thousands locally. Companies like GoDaddy, High-tech VC funding Share of U.S.
JDA Software, Infusionsoft and LifeLock, which focus on software and Q1 2013 High-tech VC funding
security, are also taking advantage of the strong workforce as well as
local business incentives to grow. Local municipal governments, state
universities and other entities are doing their part to promote start-ups
as well by hosting workshops, funding grants and providing other
resources to help entrepreneurial Phoenix high-tech companies.
28.5% 1,364
Innovation

start-up growth in your market? Population 25+ with Utility patents
A: Most definitely. Many public and private entities have been working Bachelors degree or higher 2011
hard to provide start-ups with the right environment and resources for
success. Arizona State University’s SkySong project is just one
successful example that is designed to help companies grow by
providing business services and programs such as new technologies,
capital networks, business education and a skilled workforce. Fourteen VC funding by type ($ millions)
companies currently reside in SkySong ranging from international start-
ups like Switzerland’s Airlight to local clean tech start-up Bye Energy.
Consumer Products
Q: Have you seen an increase in employee migration to your market as Electronics/Instruments
IT Services
A: Large, multinational companies such as Intel and Honeywell have
certainly attracted both national and international talent to the Phoenix Media/Entertainment
area, but smaller companies and start-ups are recruiting their talent Networking/Equipment
primarily from regional sources like Arizona State University, the Semiconductors
University of Arizona and other local colleges. $0.5
Software

32,000 490,000 2%
7% 3% Electrical Equipment Manufacturing
30,000 470,000
E-Retailers
28,000 450,000
24,000 410,000 29% 53% Computer Systems Design & Related Srvcs.
22,000 390,000
20,000 370,000
1%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Phoenix- Emerging
Phoenix market
– Emerging market
your market?
A: The Phoenix high-tech industry began to emerge alongside Intel and
Office scorecard
its continued success. After locating in Phoenix in the 1970s, Intel grew
dramatically through the 1980s and 1990s and its demand for
employees and infrastructure continued to increase. Intel’s success
$20.23 –1.6%
Cost
began to attract talent as well as other high-tech companies into the
valley, which helped to successfully catalyze the local high-tech Overall average Annual rent growth
industry. The Southeast Valley has since become a hub for high-tech office rental rate
start-ups as well as large corporate occupiers.

24.9% 69,000
Supply
A: Most recent high-tech lease transactions are dominated by
expansions with a few maintaining their footprint, a testament to construction
strong growth through the Valley. Isola recently expanded their global
headquarters in the Southeast Valley, while GoDaddy also preleased
1.8 m.s.f. 2.4%

at a new 150,000-square-foot build-to-suit project in the Ahwatukee
submarket. This trend is common amongst most recent high-tech
transactions as companies grow along with the recovering
Phoenix market. Overall net absorption Net absorption
Demand
Q: How are landlords meeting the demands of high-tech companies,

A: More often than not, tenants are requesting new, expansive, open-
concept spaces that provide employees with an extremely versatile
6.8% 322 k.s.f.
workstation environment, which allows for working hard while still High-tech services jobs Total tech tenants
fostering collaboration and team-building. As a result, many landlords as share of office jobs in the market
are investing in redesigning their product to meet these needs and
attract high-tech tenants into their buildings.
1 Chandler
GoDaddy
Rent: $22.31
2150 East Warner Road Annual growth: –0.6%
Ahwatukee submarket 17 Vacancy: 12.8%
150,000 s.f. 2 Past 12 months
11 years net absorption: 304,076 s.f.
60
2 87 Tempe
Ingram Micro
Rent: $19.09
14000 Hayden Road Annual growth: –3.3%
Scottsdale
33,864 s.f. 10
Vacancy: 15.8%
Tempe
3 Ahwatukee
Isola
Chandler Rent: $20.30
3100 West Ray Road 1
3 Annual growth: –0.5%
Ahwatukee submarket
24,104 s.f. Ahtwatukee
Vacancy: 30.8%
net absorption: –80,492 s.f.
- Andrew Batson
Pittsburgh
Pittsburgh - Emerging market
– Emerging market
Pittsburgh
Economic scorecard
17.9
Growing Contracting
late stage

early stage
Stabilizing
27,446 +2.7%
Jobs
and services jobs
$5.0 M 0.1%
A: Pittsburgh is an emerging high-tech market with a diverse mix of
Venture capital
technology-oriented companies. In particular, there are a number of
companies specializing in systems and solutions for manufacturing in
the digital age including three-dimensional printing on metal and laser High-tech VC funding Share of U.S.
micromachining. Q1 2013 High-tech VC funding

A: Pittsburgh is part of a global trend in which start-up entrepreneurs
29.4% 716
Innovation
bring their companies under one roof to share

resources, build community and, most importantly, put the bulk of
their attention toward the growth of their companies. Such incubators Population 25+ with Utility patents
include AlphaLab. Bachelors degree or higher 2011

A: Local tech companies have been on a hiring spree of late, not the VC funding by type ($ millions)
least of which is Google, which plans to add an additional 100 to 200
jobs in the Pittsburgh market over the next year. In addition to attracting $0.03
talent to the metro, Pittsburgh has been cultivating its talent at local $0.4 Consumer Products
postsecondary educational institutions including Carnegie Mellon and $0.4
University of Pittsburgh.
IT Services
Media/Entertainment
your market? Networking/Equipment
A: Many would point to the early 1990s with the development of $4.2 Semiconductors
the Pittsburgh Technology Center (PTC) in the South Oakland Software
neighborhood. Source: PricewaterhouseCoopers

High-Tech
240,000 2%
19,000 7% 3% Electrical Equipment Manufacturing
230,000 E-Retailers
15,000 220,000
Online Auctions
11,000 210,000
29% 53% Computer Systems Design & Related Srvcs.
200,000
190,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Pittsburgh
Pittsburgh - Emerging market
– Emerging market
A: With employment gains in the high-tech industries, office demand
has naturally increased, leading to many relocations and expansions. Of
$22.24 +1.4%
the three largest high-tech leasing transactions so far this year, two
involved expansions—including Netronome, which is increasing its
Cost
square footage by 16,000 square feet, and Google, which is expanding
its footprint this year by 50,000 square feet. Overall average Annual rent growth
office rental rate
Q: Is there an anchor tenant in your market appealing to high-tech
companies?
A: On the private side many would consider Google an anchor tenant.
15.2% 1.7 m.s.f.
Supply
Since Google’s announcement in 2005 to open an office in Pittsburgh,
the metro has been thrust onto the national high-tech stage with the Overall office vacancy Total office under
likes of New York, Boston and Cambridge, Massachusetts. That said, it construction
is important to mention Carnegie Mellon and the University of Pittsburgh
for, without them, Google might not have ever opened an office in
Pittsburgh.

–8,117 s.f. 0.0%
tech companies? Overall net absorption Net absorption
Demand
A: Carnegie Mellon and the University of Pittsburgh are two of the most
appealing amenities to high-tech companies looking to locate in
6.4% 200 k.s.f.

Pittsburgh. These two institutions continue to churn out top talent for the
high-tech industry. Carnegie Mellon is ranked as one of the top schools
in the world for science and technology while the University of
Pittsburgh offers an exceptional entrepreneurial excellence program. High-tech services jobs Total tech tenants

1 North
Google
3 Rent: $21.21
6425 Penn Avenue Annual growth: -0.1%
Oakland
50,000 s.f. Vacancy: 16.3%
Confidential lease term North Past 12 months
76
2 2
Smith Micro Software Oakland
West Rent: $18.35
5800 Corporate Drive East
North Annual growth: -0.2%
35,621 s.f. Vacancy: 6.5%
Confidential lease term 1 Oakland net absorption: 73,007 s.f.
CBD
376
3
Palo Alto
Netronome South
Rent: 3159 Unionville
$43.00
Road Rent: $18.43
North South Annual growth: -0.4%
Vacancy: 20,000 s.f.18%
Vacancy: 14.3%
Confidential lease term
12-month 79
Past 12 months
net absorption: 1.2 m.s.f. Southpointe net absorption: -4,125 s.f.
- Patricia Raicht
Portland- Core
Portland market
– Core market
Vice President, Research,
Portland
Economic scorecard
38.2
Growing Contracting
late stage

early stage
Stabilizing
56,587 +1.9%
Jobs
and services jobs
A: Portland has a mature semi-conductor high-tech market led by
$58.7 M 1.4%
Venture capital
Intel as well as a rapidly expanding software publishing market. While
start-ups touch all bases, web application and cloud computing
publishers are the dominant players and have seen the most success
throughout Portland. High-tech VC funding Share of U.S.
A: There has been tremendous incubator and accelerator activity
34.2% 1,753
across Portland that has helped drive smart start-up growth and venture
funding. Prior to the completion of Nike+ Accelerator there were 11
Innovation
technology-based incubators in Portland—per capita, this makes

Portland one of the incubator capitals of the world. PIE, Portland Population 25+ with Utility patents
Incubator Experiment, alone has produced three start-ups that have Bachelors degree or higher 2011
gone on to raise healthy funding.

A: The CEO of Elemental Technologies recently stated that he
doesn’t think there is an unemployed software engineer in Portland.
To stray from a cannibalistic market, local software development firms Computers/Peripherals
are on a mission to capture talent from other high-tech hubs instead of
local competition. Employee migration has yet to meet demand as
firms are not able to hire at the pace they’d like due to a limited Electronics/Instruments
workforce. Portland’s growing reputation as a trendy, green-friendly IT Services
high-tech market with more than enough breweries, combined with the
Media/Entertainment
promotion of Portland’s high-tech scene through joint effort by 11
software development firms dubbed TechTown, should begin to feed the Networking/Equipment
talent pipeline. $57.3 Semiconductors
Software

205,000 1%
200,000
Online Auctions
18,000 195,000
18% Computer Systems Design & Related Srvcs.
190,000
16,000 62%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Portland- Core
Portland market
– Core market
A: Recent high-tech transactions represent an unprecedented rapid
Office scorecard
expansion for Portland’s high-tech firms. Urban Airship, global leader in
push notifications, recently closed $25 million in additional funding and
expanded its footprint by 40,000 square feet. New Relic, a web analytic
$20.86 +0.2%
Cost
firm headquartered in the Bay Area, expanded to 40,000 square feet
and received $60 million in funding in the first quarter. While this is not
representative of the growth every high-tech firm is seeing, technology- Overall average Annual rent growth
based firms are the leading tenant requirements for Portland. office rental rate

11.4% 130 k.s.f.
Supply
A: Landlords who have been accommodative of needed flexibility by
high-tech companies have fared well over the past few years; however, Overall office vacancy Total office under
overall landlord adaption has been minimal. Landlords’ use of pocket construction
space as well as committing to heavy tenant improvement work that
provides open, airy communities have been utilized the most to capture
1.5 m.s.f. 2.7%

this growing tenant base.

tech companies? Overall net absorption Net absorption
A: Consistent rankings and national list appearances as one of the (12 months) (% of inventory)
Demand
greenest and best lifestyle cities in the nation appeal strongly to what
high-tech companies value. From downtown Portland, it’s only an hour
to surfing the coast or skiing Mt. Hood. Portland is known for some of
the world’s best craft beer and exceptional restaurant options. The
ability to live in a friendly city at a fraction of the cost of neighbor cities 9.7% 1.2 m.s.f.
San Francisco and Seattle, while being surrounded by fantastic scenery,
food cart pods and bike lanes, make Portland very appealing.

1
Tripwire
101 SW Main CBD

CBD
30
5 NE Broadway Rent: $24.04
49,053 s.f.
6 years, 4 months Northwest District
Vacancy: 8.5%
84
Past 12 months
2 3
30
WebTrends 405
111 SW 5th Avenue

CBD 2
64,676 s.f.
7 years Buckman
Pearl District
1
3 Downtown 5 Rent: $28.19
Palo Alto
Urban Airship 26 Annual growth: +2.7%
1417 NW Everett Street
Vacancy: Pearl District
18% Past 12 months
40,000 s.f.
12-month
Confidential lease
net absorption: term
1.2 m.s.f.
26
- Alex Muir
Puget
PugetSound
Sound- Core market
– Core market
Research Analyst,
Puget Sound
Economic scorecard
66.8
Growing Contracting
late stage

early stage
Stabilizing
112,107 +7.1%
Jobs
and services jobs
$59.5 M 1.4%
A: The Puget Sound is a core high-tech market, featuring a diverse
Venture capital
base of firms ranging from mega companies like Microsoft, Amazon and
Google to smaller software, app and cloud companies such as Tableau
Software Apptio, and Bungie. High-tech VC funding Share of U.S.
A: Startup Genome’s 2012 publication, Startup Ecosystem Report
2012, identified the Seattle area as the fourth best global city to build a
37.1% 3,597
Innovation
start-up based on the start-up ecosystem index they created. Of

particular interest were the number two ranking of Seattle in the Talent
Index and its number four ranking in the Support Index. It is not by Population 25+ with Utility patents
chance that the incubator and start-up scene is exploding in Seattle. Bachelors degree or higher 2011
With the tremendous influence of some of its most notable high-tech
companies, the area is a magnet for highly educated young people with
ideas and passion. These talented and entrepreneurial employees are
finding a growing number of opportunities where they can bring their VC funding by type ($ millions)
ideas to reality. From Surf Incubator, to Founder Institute, to TiE and
9Mile Labs, these fledgling entrepreneurs can find the kind of support Computers/Peripherals
they need. Offering networking, resources, office space, access to angel Consumer Products
$10.0 $12.2
funding and opportunities for collaboration, Seattle’s incubator and Electronics/Instruments
accelerator scene is vibrant and growing.
IT Services
Media/Entertainment
$22.3 $15.0 Networking/Equipment
A: Forbes recently ranked Seattle the #1 city in the country for Semiconductors
technology and STEM job growth. In addition, Forbes declared that Software
Seattle is the best metro area for Gen-Y workers, based on wage Source: PricewaterhouseCoopers

High-Tech
Services
110,000 270,000
11%
100,000 260,000 E-Retailers
250,000
80,000
70,000
26% Data Processing, Hosting & Related Srvcs.
60,000 230,000
3%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Puget
PugetSound
Sound- Core market
– Core market
growth, wages and presence of high-tech firms. Puget Sound
unemployment is down significantly, hitting the rate of 4.4 percent, Office scorecard
considered “full employment” for the region, and down 260 basis points
year-over-year. Seattle currently ranks as the major metro area with the
$30.28 +9.8%
third largest year-over-year drop in unemployment rates. This drop in
unemployment can be strongly attributed to the strength of the local
Cost
high-tech industry.
Overall average Annual rent growth
Q: Do recent high-tech lease transactions represent growth, or are office rental rate
A: Recent high-tech transactions represent rapid expansion for some of
Puget Sound’s largest high-tech firms. Zulily recently signed a lease for
13.0% 790 k.s.f.
Supply
236,000 square feet, which represents an increase of almost 300
percent of their existing space. In addition, Google announced plans to Overall office vacancy Total office under
double its campus in Kirkland to allow them to accommodate up to 800 construction
additional employees. The most obvious example of a company
expanding rapidly in Puget Sound, Amazon, leased more than 300,000
3.7 m.s.f. 4.2%

square feet in the second quarter of 2013.

interested in flexible lease terms and space? Overall net absorption Net absorption
Demand
A: High-tech users favor creative office space, and those owners that
have embraced creative amenities and materials will continue to capture
31.2% 2.7 m.s.f.

more high-tech tenants. These tenants often look to increase the density
of employees by moving away from cubicles and toward long, shared
desks and clusters of work pods. This requires increased power and
HVAC systems in order to accommodate this new workspace model. High-tech services jobs Total tech tenants
Technology tenants are currently in the market for nearly 2.7 million as share of office jobs in the market
square feet of office space in Puget Sound, so it’s clear that they will
continue to drive demand and their need for flexibility in their deal terms
will likely require owners to rethink traditional lease deal structures.
1 Lake Union
Zulily
Redmond Rent: $33.22
2601 Elliott Avenue Ballard/
Belltown/Denny Regrade University
236,076 s.f.
District Vacancy: 7.8%
10 years 5 Past 12 months
Queen Anne
2 Lake
Seattle CBD
Microsoft Union Capitol
2 Hill
Belltown/Denny Regrade
1 Bellevue CBD Rent: $32.40
320 Westlake Avenue Annual growth: +7.1%
Lake Union Seattle CBD Suburban Bellevue
93,996 s.f. Pioneer Square Water Front Vacancy: 14.0%
90
Mercer
Island
3 South Seattle
Palo Alto
RealNetworks
Bellevue CBD
Rent: $43.00 Rent: $36.17
1501 1st Avenue S Annual growth: +4.7%
Vacancy: South Seattle
18%
85,674 s.f. 405 Vacancy: 8.4%
11 years1.2 m.s.f.
- Mehtab Randhawa
Raleigh-Durham
Raleigh-Durham - Core market
– Core market
Research Analyst,
Raleigh - Durham
Economic scorecard
49.2
Growing Contracting
late stage

early stage
Stabilizing
50,545 +5.2%
Jobs
and services jobs
$1.3 M 0.03%
A: Raleigh-Durham is core high-tech market and a good majority of
Venture capital
technology companies are based in Research Triangle Park submarket.
Firms providing information technology services and manufacturing
semiconductors dominate the market. High-tech VC funding Share of U.S.
A: More than 40 percent of RTP’s companies have fewer than
10 employees. To further build the start-up and entrepreneur community
41.5% 1,719
Innovation
within the park, RTP has five incubators and business accelerators,
where currently nearly 80 start-up and early stage companies are
nurtured. Population 25+ with Utility patents
A: As local tech companies expand and new out-of-state firms open
offices, employees are accepting offers to relocate to the triangle region. VC funding by type ($ millions)
Raleigh is ranked as the second best place for businesses and careers
in the country by Forbes’ most recent survey. Computers/Peripherals
Consumer Products
Q: When did high-tech become a truly emerging or growing industry in Electronics/Instruments
your market? IT Services
A: Since 1970, over 1,800 start-up companies have been created and Media/Entertainment
more than 39,000 high-tech employees have been added to the market. Networking/Equipment
Raleigh is home to many prominent high-tech companies including
$1.3 Semiconductors
Cisco Systems, IBM and Qualcomm.
Software

165,000
160,000
24,000 3% 42% Online Auctions
155,000
145,000
140,000 33%
4%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Raleigh-Durham
Raleigh-Durham - Core market
– Core market
A: Companies have expanded in the past few months or have
announced expansion plans which will add a significant number of jobs
$19.61 +1.0%
in the long run.
Cost
tech companies? Overall average Annual rent growth
office rental rate
A: Presence of three major universities—Duke University in Durham,
North Carolina State University in Raleigh and University of North
13.7% 300 k.s.f.

Carolina in Chapel Hill—has helped create quality jobs in the region.
Supply
Venture capital is also attracted to tech community, and is one of the top
recipients of the investment in high-tech as well as healthcare-related
ventures. In addition, low cost of living and top medical institutions in the Overall office vacancy Total office under
area help tech companies pick Raleigh over other cities. construction

Why?
A: Research Triangle Park and Cary are the premier submarkets for 1.2 m.s.f. 0.4%
high-tech companies. Lower rents and the ability to create a campus- Overall net absorption Net absorption
like environment for larger firms make these submarkets lucrative. (12 months) (% of inventory)
Demand
14.2% 900 k.s.f.

A: There is moderate demand for creative space in the market and it
has yet to impact the traditional office sector.

1
IMaxPoint Interactive
Perimeter Two
Orange County
North RTP
RTP Durham
Rent: $18.82
32,715 s.f. 85 6 Forks Annual growth: +1.2%
Confidential lease term Falls of
Neuse Vacancy: 18.0%
Past 12 months
Downtown Route 1 net absorption: 352,499 s.f.
2 Durham
Progress Software Corp. South
Durham Glenwood /
Creedmoor
Perimeter Park
RTP 40
36,455 s.f. RPT/RDU 1
2
Confidential lease term
Cary West Downtown Cary
Raleigh Raleigh
3 440 Rent: $18.94
Palo AltoDesign Systems
Cadence 3 Annual growth: +0.4%
East Raleigh
200 Regency Forest Drive
Vacancy: Cary 18% Past 12 months
24,350 s.f.
12-month
5 years, 6 months
- Jenny Taumoepeau
Salt
SaltLake
LakeCity - Emerging
City marketmarket
– Emerging
Research Associate,
Salt Lake City
Economic scorecard
43.7
Growing Contracting
late stage

early stage
Stabilizing
29,428 +5.8%
Jobs
and services jobs
$85.1 M 2.1%
A: The greater Salt Lake City area is an emerging high-tech market
Venture capital
with a diverse mix of technology oriented companies. There are a
number of companies that specialize in software, mobile apps, web
design, SEO/marketing and hardware. Many of these companies are High-tech VC funding Share of U.S.
grown locally as well as expansion from Silicon Valley and other parts of Q1 2013 High-tech VC funding
the country.

31.0% 494
Innovation
A: Salt Lake City does not have many options for co-working or
incubator space. Most early stage entrepreneurs share space with other
companies or work from traditional executive offices. Weber State
University has opened “Start-up Ogden,” a co-working space for local
entrepreneurs, and if successful we may see this model applied to other
parts of the valley.
Q: Have you seen an increase in employee migration to your market as VC funding by type ($ millions)
A: They are calling Utah “Silicon Slopes.” Companies like Ebay, Adobe
and Microsoft have all made significant investments in Utah. Many other Consumer Products
companies have opened offices to capitalize on Utah’s high quality of Electronics/Instruments
life, young talented workforce and low cost of labor and operating costs. IT Services
Media/Entertainment
Software

145,000 3%
20,000 E-Retailers
140,000 32%
15%
125,000
120,000 7%
- 115,000 33% Other Information Srvcs.
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Salt
SaltLake
LakeCity - Emerging
City marketmarket
– Emerging
your market? Office scorecard
A: Novell and Wordperfect were the catalysts for high-tech growth in
the early 1990s. More recently companies like Omniture (acquired by
$18.05 +2.9%
Adobe) and Fusion-io have continued to produce entrepreneurs and
strong engineering talent throughout the market.
Cost
Q: Do recent high-tech lease transactions represent growth, or are Overall average Annual rent growth
companies mostly staying the same size? office rental rate
A: Recent transactions represent growth. There are many emerging
companies that are growing organically as well as larger high-tech
companies opening expansion offices in Utah.
12.1% 539 k.s.f.
Supply
Q: How are landlords meeting the demands of high-tech companies Overall office vacancy Total office under
interested in flexible lease terms and space? construction
A: Many are working with letters of credit and larger security
deposits instead of personal guarantees. Landlords are also
providing termination options to provide added flexibility. Most
landlords are requiring at least a five-year term if there are significant 1.3 m.s.f. 2.0%
tenant improvements. Overall net absorption Net absorption
Demand

A: Downtown, the historic buildings with exposed ceilings and stained
concrete have lower vacancy and demand high rents. In the suburban
market, tenants are required to create their own creative space in more
12.3% 1,500 s.f.
standard corporate office parks. Most all high-tech tenants desire High-tech services jobs Total tech tenants
creative space but it is a challenge to find in Utah. as share of office jobs in the market

1 Salt Lake City
1
Downtown SLC
Venafi 80
Rent: $19.45
175 East 400 South, SLC Annual growth: -.2%
Downtown West Valley
37,000 s.f.
City Vacancy: 13.4%
40
2
2 South Valley/North
LANDesk Utah County
698 West 10000 South, Sandy Rent: $20.16
South Valley/North Utah County Annual growth: +2.4%
95,827 s.f. 89 Vacancy: 11.45%
3
Palo Alto Provo
Money Desktop
Rent: $43.00 Rent: $17.23
2919 W. Ashton Blvd, Lehi 15
South Valley/North 18%
Vacancy: Utah County
50,000 s.f. Utah
Vacancy: 13.32%
12-month Lake Past 12 months
5 years1.2 m.s.f.
net absorption: Provo
- Jessica Chiang
San
SanDiego - Core
Diego– Coremarket
market
Research Analyst,
San Diego
Economic scorecard
31.1
Growing Contracting
late stage

early stage
Stabilizing
51,201 –0.4%
Jobs
and services jobs
A: San Diego’s diversity, especially in the high-tech sector, has been
$54.0 M 1.3%
fundamental in its success as a technology hub. Home to high-tech
Venture capital
tenants in industries such as software, microchip manufacturing and
wireless technologies, San Diego also caters to both large-cap
corporations and smaller entrepreneurial firms, both of which have High-tech VC funding Share of U.S.
helped the high-tech industry expand in recent years. The leader of the Q1 2013 High-tech VC funding
high-tech pack is powerhouse Qualcomm, a wireless technology and
service leader. The “Q” occupies a large part of the Sorrento Mesa
submarket and more than five million square feet countywide.
33.7% 3,293
Innovation

A: The highly educated workforce available to employers in San Diego
is due largely in part to the collection of renowned colleges and Population 25+ with Utility patents
universities in the area including University of California, San Diego, the Bachelors degree or higher 2011
University of San Diego, Point Loma Nazarene University and San
Diego State University. With one of the nation’s most rigorous
engineering and computer science programs, UCSD continues to push
thousands of well-qualified graduates into the high-tech labor market VC funding by type ($ millions)
every year. The high density of high-tech corporations that have
continued to grow also serve to attract high-tech professionals to the Computers/Peripherals
industry from outside of the region. Consumer Products
$8.0
$7.0 IT Services
A: As evident by its existing one million square feet space requirement
and expansion of their campus, Qualcomm will continue to grow its Media/Entertainment
$35.0 $4.0
operations and high-tech footprint in San Diego. The growth of the Networking/Equipment
telecommunications giant will encourage the expansion of related Semiconductors
industries including communications software, next-generation mobile Software
broadcasting and high-tech electronics manufacturing, as other firms Source: PricewaterhouseCoopers
seek to capitalize on the concentration of available talent in the region.
High-Tech Office-Using
High-Tech Services Employment Computer/Electronic Product Manufacturing
Services
27,000 Office-Using Employment, Less High-Tech 315,000 8% Electrical Equipment Manufacturing
26,000 310,000 4%
25,000 300,000
290,000 48%
22,000 285,000
280,000 34%
21,000 275,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
San
SanDiego - Core
Diego– market
Core market
Q: Where do high-tech companies prefer to office in the market?
A: The two submarkets where high-tech is most concentrated are the Office scorecard
Sorrento Mesa and UTC/Eastgate areas. Qualcomm’s presence in
Sorrento Mesa has attracted many high-tech firms to the submarket and
$25.80 +0.9%
its central location provides easy access for workers. UTC has
historically been home to venture capital firms that have helped fund the
Cost
smaller, entrepreneurial high-tech start-ups and many of the venture
capital firms wanted to be close to their investments. Since then, and Overall average Annual rent growth
thanks to its close proximity to UCSD and a wide range of amenities, office rental rate
UTC/Eastgate has continued to evolve into a more desirable area for
tech firms.
14.4% 540 k.s.f.
Supply
A: With a footprint growing by leaps and bounds, Qualcomm serves as
construction
an anchor tenant for many high-tech companies in the region.
Headquartered in Sorrento Mesa, Qualcomm has helped define the
1.7 m.s.f. 2.1%

submarket as a community for like-minded high-tech tenants. With well
over a million square feet leased and over four million square feet of
owned space in Sorrento Mesa alone, Qualcomm not only has a huge
presence in that submarket, but the region as a whole. Overall net absorption Net absorption
Demand

A: While Qualcomm continues its steady growth, their activity is not
entirely symbolic of the overall high-tech market, as the rest of the
industry’s recent leasing footprint has diminished. Excluding Qualcomm,
8.4% 1.8 m.s.f.
the average size of the high-tech tenant fell to 7,800 square feet in 2013
compared to the 9,800-square-foot average in 2012.

1 Hi-Tech Electronic
Manufacturing
2 5
Sorrento Mesa
7420 Carroll Road
Miramar Rent: $27.84
43,812 s.f. Annual growth: +16.0%
6 years, 2 months Vacancy: 9.6%
Sorrento
Mesa Past 12 months
Via Telecom 3
1
3390 Carmel Mountain Road UTC
Del Mar Heights
26,203 s.f.
5 years, 7 months
UTC/Eastgate
3 Rent: $30.96
Palo Alto
Qualcomm 5
5505 Morehouse Drive
Vacancy:Sorrento Mesa
18% Past 12 months
24,605 s.f.
12-month
6 years1.2 m.s.f.
net absorption:
- Brandon Myers
San
SanFrancisco
Francisco- Core market
– Core market
Research Analyst,
San Francisco
Economic scorecard
81.2
Growing Contracting
late stage

early stage
Stabilizing
41,778 +26.8%
Jobs
and services jobs
$735.7 M 17.8%
A: Cloud computing remains one of the most prominent specialties.
Venture capital
Salesforce.com, a cloud computing company, is one of the largest high-
tech tenants in the city, leasing over 1.8 million square feet. Other well-
established high-tech specializations include ecommerce companies High-tech VC funding Share of U.S.
such as Square and Macys.com, transportation application developer Q1 2013 High-tech VC funding
Uber, and travel industry disruptor Airbnb, all of which have taken
substantial amounts of space within the last year.

52.1% 581
Innovation

A: Co-working space, such as WeWork and Regus, have afforded
smaller start-up tech companies the ability to get up and running before
having to make a long-term commitment to a full lease. Various co-
working spaces, as well as accelerators in the area, have grown in
popularity with the influx of high-tech to the market.
Q: What types of professionals are drawn to your market? Why? VC funding by type ($ millions)
A: The high-tech workforce is comprised predominantly of highly
educated, young professionals looking for the opportunity to be near $2.5 $47.2
other like-minded individuals in their field. Professionals across the Consumer Products
$10.2
market increasingly prefer the walkability of the city and ease of access Electronics/Instruments
to nearby amenities as well as the abundance of public transportation. IT Services
$405.1 $269.7 Media/Entertainment
Q: What does the future of high-tech look like in your market? Networking/Equipment
A: Bright. San Francisco remains one of the core markets that are well- Semiconductors
known for ingenuity and for attracting top talent from across the world.
Software
The deep talent pool available will help to fuel organic growth within the Source: PricewaterhouseCoopers
high-tech sector and will drive the market into the future.
6% 3%
3% Electrical Equipment Manufacturing
45,000 210,000
40,000 200,000 17% E-Retailers
30,000
180,000 4%
20,000 170,000
15,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
San
SanFrancisco
Francisco- Core market
– Core market
A: Companies such as Salesforce.com, Obvious Corporation, Meraki
and Kixeye have continued to sign significant expansionary leases.
$54.64 +12.2%
Additionally, smaller and lesser established start-ups are also beginning
to find their footing. However, no industry is immune to setbacks, as
Cost
many high-tech tenants continue to make up a majority of the sublease
space currently on the market. Overall average Annual rent growth
office rental rate
A: Landlords have been more than willing to deliver, usually in the way
11.3% 2.6 m.s.f.
Supply
of offering an increased amount of tenant improvement allowance to put
toward a creative build-out. Landlords have also been flexible with Overall office vacancy Total office under
accepting shorter lease terms and allowing high-tech tenants the ability construction
to phase-in their rent over time, as many high-tech companies are
unsure of potential growth rates and future space requirements.

Why?
1.1 m.s.f. 1.5%
A: The South of Market submarket, also known as SOMA, has been
Demand
one of the most popular submarkets as it offers easy access to nearby

amenities, public transportation and has become a concentration for
18.8% 2.0 m.s.f.

high-tech companies. The South Financial District has also become
popular, mainly due to its central location and walkability. Larger high-
tech companies requiring more space, such as Twitter and Yammer,
have planted roots into Mid-Market, an up-and-coming submarket in a High-tech services jobs Total tech tenants
historically gritty part of town. as share of office jobs in the market

1 South of Market
Uber Technologies
Rent: $56.96
1455 Market Street Annual growth: +24.2%
Mid-Market North Financial
88,000 s.f. District Vacancy: 9.2%
2 Union Square 3 South Financial South Financial

GitHub District District
275 Brannan Street Rent: $55.83
South of Market Annual growth: +9.3%
54,763 s.f. Vacancy: 10.2%
South of Market net absorption: -30,251 s.f.
Mid-Market
3
Palo Alto Mid-Market
SunRun 1
Rent: $43.00 Rent: $50.77
595 Market Street Annual growth: +16.2%
South Financial18%
Vacancy: District
43,842 s.f. Vacancy: 23.0%
7 years1.2 m.s.f.
- Christan Basconcillo
San
SanFrancisco
FranciscoMid-Peninsula - Core–market
Mid-Peninsula Core market
San Francisco Mid-Peninsula
Economic scorecard
77.0
Growing Contracting
late stage

early stage
Stabilizing
40,913 +18.2%
Jobs
and services jobs
$182.4 M 4.4%
A: Software, social media and gaming are the predominant high-tech
Venture capital
companies in the San Francisco Mid-Peninsula as it is home to big-
name firms like Facebook, Oracle, Nintendo, Electronic Arts and
Evernote. High-tech VC funding Share of U.S.
A: Yes, however, much of the talent and up-and-coming start-up firms
are being incubated in Silicon Valley. Once they’ve graduated, start-ups
43.1% 2,695
Innovation
look for space near local high-tech clusters, like Mountain View, Palo
Alto, Redwood City, San Mateo and, in some cases, San Francisco.
Q: Have you seen an increase in employee migration to your market as Bachelors degree or higher 2011
A: Facebook’s relocation of their corporate headquarters is a prime
example of this. Their current campus holds approximately 3,000
employees, and they have growth plans to double in the next few years. VC funding by type ($ millions)
This has helped the Mid-Peninsula recover from the last recession from
a local economic standpoint . Computers/Peripherals
$3.0
Consumer Products
A: Software companies have been growing rapidly over the past 24
$25.0 IT Services
months, as many firms have increased their overall real estate footprint $91.1
Media/Entertainment
in the Mid-Peninsula. However, the gaming industry has been struggling
as of late, resulting in an increase in sublease space. It is expected that Networking/Equipment
the space will eventually back-fill with high-tech tenants seeking rent $39.5
Semiconductors
relief from neighboring Silicon Valley submarkets like Palo Alto and Software
Mountain View. Source: PricewaterhouseCoopers

High-Tech Office-Using Computer/Electronic Product Manufacturing
High-Tech Services Employment
Services
38,000 90,000
36,000 28%
85,000 E-Retailers
34,000 1%
30,000 75,000
28,000 70,000 5%
24,000 65,000
Software Publishers
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012

San
SanFrancisco
FranciscoMid-Peninsula - Core–market
Mid-Peninsula Core market
A: Leasing activity has been on a steady upward pace over the past 24
months. High-tech firms have been growing, but not at the robust pace
$44.28 +11.3%
as Silicon Valley given the lack of available larger block supply that can
satisfy requirements over 100,000 square feet. Currently, demand is
Cost
being driven by mid-size firms looking for anywhere between 10,000
and 30,000 square feet. Overall average Annual rent growth
office rental rate
A: Much like the Valley, most high-tech clustering has been more
16.8% 86 k.s.f.
Supply
geographic. Firms have established themselves near and around major
transportation hubs and bridge thoroughfares in order to service clients Overall office vacancy Total office under
and employees all around the Bay Area. construction
239 k.s.f. 1.6%

tech companies?
A: In this cycle, high-tech companies have been primarily attracted to
properties that offer one or more of the following amenities: immediate
access to bridges (Highway 92 or 84), shuttle service or walking Overall net absorption Net absorption
distance to transportation stops such as CalTrain, or properties centered (12 months) (% of inventory)
Demand
in micro-urban downtown areas surrounded by local retail and

restaurants. Submarkets that feature such amenities have tightened
considerably as tenants are experiencing a very competitive
environment for space. 30.8% 1.3 m.s.f.

580
1 Daly City Redwood City
Axiom 238
101
Rent: $46.68
100 Redwood Shores Parkway 280 Annual growth: +19.6%
Redwood Shores South San Francisco
62,721 s.f. Vacancy: 15.5%
Hayward
10 years Pacifica 380 Past 12 months
San Bruno 92
2 Millbrae Redwood Shores

Zuora
Burlingame Rent: $51.48
1051 E Hillsdale Drive Annual growth: +9.3%
Foster City Foster City
2 880
41,706 s.f. Redwood Vacancy: 13.7%
San Mateo Shores
3 net absorption: –66,579 s.f.
101
1 84
3
Palo AltoXtime
Belmont
San Mateo
San Carlos
Rent: $43.00 Rent: $38.28
1400 Bridge Parkway Redwood
Redwood Shores City
Vacancy: 18%
33,455 s.f. Menlo Park Vacancy: 8.5%
3 years1.2 m.s.f.
- Christan Basconcillo
Silicon
SiliconValley
Valley- Core market
– Core market
San Francisco Mid-Peninsula
Economic scorecard
78.7
Growing Contracting
late stage

early stage
Stabilizing
202,583 +2.2%
Jobs
and services jobs
A: Silicon Valley has long been a high-tech dominant market;
$646.4 M 15.7%
Venture capital
however, depending on current trends in technology, the types of
companies to experience growth have varies. Currently, companies that
focus primarily on software development for mobile devices and internet
and social media firms have experienced the most explosive growth
over the past 24 months.

A: Yes, Silicon Valley’s young talent pool combined with local venture
45.9% 10,256
Innovation
capital funding and the emergence of incubators like YCombinator have

helped to propel start-up companies into expansion. In some cases,
start-ups who exited from stealth mode immediately expanded their Population 25+ with Utility patents
operations and have robust future growth plans. Bachelors degree or higher 2011

A: The Valley has been experiencing fierce competition from the San
Francisco market. Because the Valley has been a more suburban VC funding by type ($ millions)
campus environment, some of the more youthful high-tech firms have
relocated to San Francisco to be around local amenities and Computers/Peripherals
their peers. $89.2 Consumer Products
A: Hardware has been making a slow comeback thanks to recent IT Services
$327.1 $11.0
advancements in 3D printing. Many high-tech manufacturers with Media/Entertainment
operations in the Valley have slowly begun to invest more capital in $34.3
$43.5 Networking/Equipment
emerging manufacturing high-tech. Many firms are beginning to build
prototypes locally as the time to market for a working product and $42.9
prototyping costs are significantly reduced. Software

95,000 10%
200,000 E-Retailers
90,000
85,000 190,000 3%
Online Auctions
80,000 180,000 53%
170,000
65,000 160,000
0%
1%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Silicon
SiliconValley
Valley- Core market
– Core market
A: Recent transactions represent growth in the market and demand for
space is expected to continue for the next 12 to 24 months.
Q: Is there an anchor tenant in your market that other high-tech $35.40 +9.3%
Cost
A: High-tech tenants in the Valley are clustered by location rather than Overall average Annual rent growth
by tenant. Most of the clustering has occurred in submarkets that offer office rental rate
excellent freeway access or that are well-served by public transit,
including Palo Alto, Mountain View, Sunnyvale, Santa Clara and to
some degree North San Jose.
16.1% 1.7 m.s.f.
Supply
Q: Is creative space in high demand and, if so, how has it out- Overall office vacancy Total office under
performed the traditional office sector? construction
A: The demand for creative space is high, however, it is because of this
demand that Silicon Valley’s R&D market has been impacted.
1.0 m.s.f. 1.6%

Submarkets like North San Jose are comprised of older generation R&D
space that has long sat vacant. Landlords have been investing capital in
extensive building renovations, calling the completed project “modern,
creative space.” From a tenant perspective, this offers the opportunity to Overall net absorption Net absorption
lease quality space at a sometimes lower rate than Class A office. (12 months) (% of inventory)
Demand
Meanwhile, landlords are able to justify asking prices that are double
what they were prior to the renovation.
35.8% 3.1 m.s.f.


1 Palo Alto
Mozilla
880
Rent: $82.20
331 E Evelyn Avenue Annual growth: +20.4%
Mountain View 262
58,500 s.f. Vacancy: 6.3%

Palo Alto
Milipitas
2 Mountain View
Cloudera 2
237
Rent: $63.00
1001 Page Mill Road Annual growth: +27.5%
1
Palo Alto Mountain View 101
53,588 s.f. Vacancy: 3.0%
3
7 years Sunnyvale Past 12 months
Santa Clara San Jose
3
Palo Alto 101 Sunnyvale
Gigamon 280
Rent: $43.00 Rent: $49.08
3300 Olcott Street Cupertino
Vacancy: Santa Clara18% 87
105,664 s.f. Vacancy: 7.2%
12-month Campbell
5 years1.2 m.s.f. Past 12 months
- Summer Newman
Washington,
Washington, - Emerging
DCDC marketmarket
– Emerging
Research Analyst,
Washington, DC
Economic scorecard
56.8
Growing Contracting
late stage

early stage
Stabilizing
24,793 +3.3%
Jobs
and services jobs
Q: Has an incubator, accelerator or co-working space helped in
facilitating start-up growth in your market?
A: The area’s abundance of universities has provided strong supporters
$121.9 M 3.0%
Venture capital
of start-up firms, as have the growing number of incubators, which aim
to build a stronger high-tech presence in the District. The most notable
incubator in recent months has been 1776, Inc., which attained a High-tech VC funding Share of U.S.
$200,000 grant from the city to aid in its growth, allowing for the Q1 2013 High-tech VC funding
development of a start-up school, the incubator space, as well as 1776,
Inc.’s founders’ investments in a select number of high-tech firms that
grow out of 1776, Inc. As a result, other landlords have begun to
48.0% 1,790
consider high-tech firms as more viable tenants.
Innovation

A: The core business of the high-tech industry will likely moderate over Population 25+ with Utility patents
the next several years as federal investment slows and firms look to the Bachelors degree or higher 2011
private sector for funding. However, incubators that afford newly formed
high-tech companies with short-term, price-conscious options, as well
as the collaboration of other start-up companies will likely continue for
some time.
Q: What types of professionals are drawn to your market? Why? Computers/Peripherals
A: The high-tech industry, especially segments involved in cyber $7.3
Consumer Products
security, has remained a strong growth sector in Washington, DC. The $4.6
U.S. Department of Defense remains one of the largest users of
technology products and services in the world and, as a result, the IT Services
country’s top high-tech firms and contractors have traditionally opened a Media/Entertainment
location in Washington, DC. However, recent spending cuts due to Networking/Equipment
sequestration have led high-tech firms to diversify their focuses and $110.0 Semiconductors
broaden their customer base to the private sector, which continues to
Software
also have a strong presence in the Washington, DC market. Source: PricewaterhouseCoopers

Services
25,000 Office-Using Employment, Less High-Tech 180,000 2%
13% Electrical Equipment Manufacturing
22,500 175,000 E-Retailers
2%
170,000

2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Software Publishers
Washington,
Washington, - Emerging
DCDC marketmarket
– Emerging
A: In recent months, two of the most notable cases that have taken
additional space include Microsoft, which has expanded by an additional
$51.43 –1.0%
25,260 square feet since signing its original lease at 901 K Street, NW
in 2010, and Google, which took an additional 26,330 square feet when
Cost
it signed a lease to relocate from 1101 New York Avenue, NW to Capitol
Hill. Small high-tech firms are also expanding as they graduate beyond Overall average Annual rent growth
the incubators. office rental rate

11.8% 2.1 m.s.f.
Supply
A: The landlord of 1133 15th Street, NW worked out an arrangement
that allowed the high-tech incubator 1776, Inc. to have 24-hour access, Overall office vacancy Total office under
HVAC, below-market rent, a short-term lease and expansion rights in construction
the building. An internet provider donated their labor and material, and a
grant from the city helped get the incubator started. Six months after
moving in, 1776, Inc. has committed to taking an additional floor. The
recent success of 1776, Inc., from both the landlord and tenant
perspective, has prompted several other landlords across the metro
86 k.s.f. 0.1%
region to consider incubators as desirable tenants. Overall net absorption Net absorption
Demand

tech companies?
A: The majority of younger, smaller high-tech firms tend to gravitate
toward creative spaces in areas with amenities that offer more round-
12.6% 110 k.s.f.
the-clock options, such as bars and coffee shops, that allow for High-tech services jobs Total tech tenants
impromptu collaborations. Large, multinational high-tech firms prefer as share of office jobs in the market
locations that are in closer proximity to the government officials that they
are, in many cases, lobbying.
1 CBD
AOL
Rent: $52.29
1750 Pennsylvania Avenue, NW Annual growth: – 0.5%
East End 2
15,153 s.f. Vacancy: 12.6%
2 East End
Microsoft
CBD Rent: $55.83
901 K Street, NW 1
East End 3 Annual growth: –0.79%
5,980 s.f. (expansion) Vacancy: 11.7%
3 Google Capitol Hill

25 Massachusetts Avenue, NW Rent: $60.07
Capitol Hill Annual growth: +0.4%
Capitol Hill
54,010 s.f. Vacancy: 7.1%
(relocation with expansion) Past 12 months
11 years, 2 months net absorption: 159,032 s.f.
Appendix
Employment characteristics
Total high-tech annual Total high-tech jobs as a

Total high-tech jobs job growth percent of all jobs
Market Employees Rank Percent growth Rank Employees Rank
Atlanta 31,440 20 7.5% 8 5.0% 15
Austin 54,278 13 9.8% 6 8.6% 4
Baltimore 33,708 19 6.6% 11 3.5% 21
Boston 139,383 2 4.9% 16 7.7% 8
Chicago 97,138 6 7.7% 7 3.2% 22
Dallas 136,097 3 6.6% 11 7.9% 6
Denver 67,200 9 5.6% 14 5.7% 11
Indianapolis 21,366 25 16.8% 4 2.9% 23
Las Vegas 8,145 26 17.7% 3 1.1% 26
Los Angeles 97,811 5 -0.1% 25 2.8% 24
Minneapolis 78,601 7 1.9% 21 5.2% 13
New Jersey State 31,440 20 7.5% 8 5.0% 15
New York City (Manhattan) 76,916 8 11.7% 5 4.0% 20
Orange County 63,079 11 2.1% 20 5.0% 15
Philadelphia 34,823 18 1.3% 24 5.4% 12
Phoenix 65,060 10 1.7% 23 4.4% 19
Pittsburgh 27,446 23 2.7% 18 2.8% 24
Portland 56,587 12 1.9% 21 6.5% 9
Puget Sound 112,107 4 7.1% 10 11.1% 3
Raleigh-Durham 50,545 15 5.2% 15 7.9% 6
Salt Lake City 29,428 22 5.8% 13 5.9% 10
San Diego 51,201 14 -0.4% 26 4.8% 18
San Francisco 41,778 16 26.8% 1 8.5% 5
San Francisco Peninsula 40,913 17 18.2% 2 13.2% 2
Silicon Valley 202,583 1 2.2% 19 24.7% 1
Washington, DC 24,793 24 3.3% 17 5.2% 13

Investment and innovation
Share of U.S. high-tech College education Patents

venture capital funding
Percent with BA’s Utility patents
Market Percent Rank Rank Rank
or higher generated
Atlanta 5.5% 5 34.5% 15 1,680 17
Austin 2.1% 9 40.6% 7 2,460 10
Baltimore 0.0% 23 35.8% 13 667 22
Boston 8.6% 4 43.1% 4 4,537 2
Chicago 0.3% 17 34.2% 16 3,033 7
Dallas 0.0% 23 31.4% 20 2,215 12
Denver 0.6% 15 38.4% 9 745 20
Indianapolis 0.0% 22 31.1% 21 497 24
Las Vegas 0.0% 23 22.1% 26 231 26
Los Angeles 2.7% 8 29.3% 24 2,844 8
Minneapolis 0.0% 20 38.5% 8 3,113 6
New Jersey State 0.0% 23 35.3% 14 3,850 3
New York City (Manhattan) 9.2% 3 36.2% 12 1,102 19
Orange County 2.0% 11 36.7% 11 2,310 11
Philadelphia 0.3% 16 32.9% 19 2,069 13
Phoenix 0.0% 21 28.5% 25 1,364 18
Pittsburgh 0.1% 18 29.4% 23 716 21
Portland 1.4% 13 34.2% 16 1,753 15
Puget Sound 1.4% 12 37.1% 10 3,597 4
Raleigh-Durham 0.0% 19 41.5% 6 1,719 16
Salt Lake City 2.1% 10 31.0% 22 494 25
San Diego 1.3% 14 33.7% 18 3,293 5
San Francisco 17.8% 1 52.1% 1 581 23
San Francisco Peninsula 4.4% 6 43.1% 4 2,695 9
Silicon Valley 15.7% 2 45.9% 3 10,256 1
Washington, DC 3.0% 7 48.0% 2 1,790 14

Technologies of today will inevitably be
replaced by technologies of tomorrow and
markets that can adapt and reinvent will
remain at the forefront of each crest.
About Jones Lang LaSalle
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High-technology

Clustering continues across the

No signs of a bubble here: conservative funding, stable IPO activity and

Table of contents  3 Pittsburgh - Emerging market  48

In this report  4 Portland - Core market  50

What you need to know – Puget Sound - Core market  52

Local markets - Core and emerging  15 Washington, DC - Emerging market  66

Atlanta - Emerging market  16 Appendix  68

Austin - Core market  18 Employment characteristics  69

Baltimore - Emerging market  20 Investment and innovation  70

Boston - Core market  22

Chicago - Emerging market  24

Dallas - Core market  26

Denver - Core market  28

Indianapolis - Emerging market  30

Las Vegas - Emerging market  32

Los Angeles - Emerging market  34

Minneapolis - Emerging market  36

New Jersey - Emerging market  38

New York - Core market  40

Orange County - Emerging market  42

Philadelphia - Emerging market  44

Phoenix - Emerging market  46

Jones Lang LaSalle’s third annual High-Technology Office Outlook

Today, location plays an important role in the success of a high-

What you need to know –

High-technology office markets out-perform overall U.S.

The high-tech industry comprises only 8.8 percent of total office-using

6% Core tech markets: $32.69

have been seizing the opportunity to appeal to these innovative

The high-technology economy

1 Enrico Moretti, New Geography of Jobs

High-technology services: innovative employees beat traditional

7. 5415 Computer Systems highly innovative, the multiplier

Source: Bureau of Labor Statistics

Top ten states by utility patents

Source: United States Patent and Trademark Office

The demand for these visas is so great that even

It is believed by many advocates of this reform that the increase in

The H1B visa program is highly utilized by high-tech companies,

Venture capital and IPO activity

Likewise, first sequence funding (first-time financing) for all high-tech 6%

Finally, we have an active Corporate Innovation Program with many of

The office-as-a-service model provides everything a technology

3. Where do you see yourself within the commercial real estate

5. Where do see the next

6. Clustering has been a significant driver of growth in this high-tech

Photo credits: Michael Dubois

4. What are your general guidelines when selecting a new market

High-technology industry market score and cycle clock

Silicon Valley, Total weighted score

Local markets - Core and emerging

Total Total high-tech High-tech venture Share of

market score Growing

have raised $1 billion dollars. In 2012, a new start-up community center

High-tech employment High-tech employment composition

additional 800 new jobs at its Atlanta headquarters.

Q: How are landlords meeting the demands of high-tech companies

Top three recent lease transactions Select high-tech submarkets

market score Growing

Q: Has incubator, accelerator or co-working space helped in facilitating

office footprint in downtown Austin and received a visit from President

Q: What does the future of high-tech look like in your market?

Table of contents 3 Pittsburgh - Emerging market 48

In this report 4 Portland - Core market 50

What you need to know – Puget Sound - Core market 52

Local markets - Core and emerging 15 Washington, DC - Emerging market 66

Atlanta - Emerging market 16 Appendix 68

Austin - Core market 18 Employment characteristics 69

Baltimore - Emerging market 20 Investment and innovation 70

Boston - Core market 22

Chicago - Emerging market 24

Dallas - Core market 26

Denver - Core market 28

Indianapolis - Emerging market 30

Las Vegas - Emerging market 32

Los Angeles - Emerging market 34

Minneapolis - Emerging market 36

New Jersey - Emerging market 38

New York - Core market 40

Orange County - Emerging market 42

Philadelphia - Emerging market 44

Phoenix - Emerging market 46